China plans to sell 3 per cent of its shares in publicly traded companies this year, said the China Securities Regulatory Commission (CSRC). The shares would be sold at market prices through a bidding system by investment banks. The government owns up to 75 per cent of shares in publicly-traded companies and these sales are part of a 14-year plan to raise Yn2,000bn by selling shares to help fund welfare costs and infrastructure construction. Shares in 51 companies would be sold off in 2002, rising to 132 companies in 2003 and 146 in 2004.
The programme had been suspended in 2001 because investors feared that increasing the volume of shares on the market would lead to a supply glut. This latest announcement caused share prices on China’s stock exchanges to fall. The CSRC reacted by saying the proposed selldown scheme was still under discussion and could be refined. It added that a way would be found to sell the shares that would both safeguard investor interests and preserve market stability.