The mainland's top securities regulator plans to expel perennial loss makers from the stock market.
Guo Shuqing, appointed chairman of the China Securities Regulatory Commission (CSRC) in October, intends to set up a delisting mechanism in the first half of this year.
He told reporters on the sidelines of the National People's Congress in Beijing yesterday that a delisting mechanism on the main board could help curb overspeculation while safeguarding investors' interests.
Guo's statement adds to evidence that the reform-minded chairman is determined to bring a sea change to the mainland market. His plans include overhauling the controversial mechanism for initial public offerings, encouraging local government pension funds to invest in equities and creating a market for high-yield corporate bonds.
Talk of setting up a delisting mechanism began a decade ago but has gone nowhere.
Since the mainland stock market was established in 1990, most companies that have gone public have been controlled by local governments, and their IPOs have been aimed more at raising funds than sharing the business with investors.
Habitual loss-makers would usually be rescued by the local governments, which would inject profitable assets into the listing vehicles.