Cheng Siwei advocates delisting worthless firms to speed up the development of mainland market
About 70 per cent of China's listed companies are not worth investing in and some of them should leave the market, according to a senior government official.
Cheng Siwei, a vice-chairman of the National People's Congress (NPC), spoke yesterday, less than a week after his published comments helped spark a major correction in frothy prices.
In an article in the central bank publication, the Financial News, Mr Cheng said the quality of mainland-listed firms was the biggest impediment to the development of the stock markets and current prices were clear evidence of a bubble.
'A swelling bubble can create short-term prosperity and a stock craze but at some point it will pop and asset prices will collapse,' he said.
According to his analysis, only 400 or about 30 per cent of the 1,344 publicly listed firms in mid-2006 were worth investing in while the remainder 'had little or no value'.