Chairman of the China Securities Regulatory Commission, Wu Qing: When the market experiences irrational and drastic fluctuations and other extreme situations, decisive action should be taken.

On March 6, Chairman of the China Securities Regulatory Commission (CSRC) Wu Qing answered questions from reporters at the economic theme press conference of the Second Session of the Fourteenth National People's Congress. Wu Qing stated that it is important to recognize that market operations have their own rules, and under normal circumstances, intervention should not be necessary. However, if the market deviates significantly from fundamentals and extreme situations such as irrational volatility, liquidity depletion, market panic, and severe loss of confidence occur, decisive action should be taken to correct market dysfunction. There are already effective practices in place for this, and relevant mechanisms will be further improved to prevent systemic risks. Wu Qing also mentioned the issue of quantitative trading, which is a topic of much discussion. How to adjust according to our national and market conditions, highlight fairness, effectively regulate and promote standardized development is something that requires further improvement in institutional arrangements. In addition, market supply and demand relationships and prices are determined by market self-regulation and self-balancing factors. For example, how to effectively connect the primary market and secondary market, establish orderly cycles, and achieve coordinated development requires further fine-tuning. The Chairman's remarks at the economic theme press conference of the Second Session of the Fourteenth National People's Congress are as follows: Chairman Wu Qing answers questions from reporters at the economic theme press conference of the Second Session of the Fourteenth National People's Congress On the afternoon of March 6, 2024 (Wednesday), the Second Session of the Fourteenth National People's Congress held a press conference in the Media Center's press briefing room. Director of the National Development and Reform Commission Zheng Zhengjie, Minister of Finance Lan Fu'an, Minister of Commerce Wang Wentao, Governor of the People's Bank of China Pan Gongsheng, and Chairman of the China Securities Regulatory Commission Wu Qing answered questions from Chinese and foreign journalists on issues related to development, reform, fiscal budgets, commerce, finance, and securities. The following is a partial verbatim transcript of the press conference. Reporter from Shanghai Securities News and China Securities Network: I have a question for Chairman Wu Qing. There have been many discussions recently on the basic functions of the capital market, and everyone is eager to know your views on this and your considerations for improving capital market regulation. Thank you. Wu Qing: Thank you for your question, and thank you all for your concern about the capital market. I haven't been in this position for a full month yet, and I am still learning while doing the job, with learning as the priority. On one hand, it is important to further study and understand the decisions and arrangements made by the Party Central Committee and the State Council regarding the capital market work, and to push for their implementation. On the other hand, through research and listening to various opinions and suggestions, including those of Wuxi Online Offline Communication Information Technology Co., Ltd. After sorting through everything, I am very touched and inspired. I think some of the fundamental issues mentioned a lot by everyone are very important, such as the issues related to the basic functions of our market. For example, how to balance investment and financing, fairness and efficiency, are all worth our serious consideration. Regarding investment and financing, I understand that they are two sides of the same coin, inseparable. These two functions complement each other, and without investment, there is no financing, without buyers, there are no sellers; only with balanced investment and financing development, can the capital market form a virtuous cycle. Regarding fairness and efficiency, I understand that under conditions of fair trading, reasonable pricing, and full competition, efficient resource allocation can be achieved to promote high-quality development, giving the capital market lasting vitality. However, because market participants have many differences in funds, technology, information, etc., regulators must pay special attention to fairness, making transparency, fairness, and justice the most important principles. This is especially important in our market, where the vast majority are small and medium investors. Therefore, protecting investors, especially the legal rights of small and medium investors, is the most important central task of the CSRC, and this is a direct embodiment of the political and people-centered aspects of capital market regulation work. Regarding the next steps, we will deeply implement the spirit of the Central Financial Work Conference, firmly grasp the main thread of strengthening supervision, preventing risks, and promoting development, adhere to the direction of marketization and rule of law, respect rules, respect norms, and further promote the high-quality development of the capital market. Respecting rules, first and foremost, means respecting market rules, economic rules, and innovation rules; respecting norms means respecting laws, contracts, and international technical standards. From the regulatory perspective, the focus is on two words, strength, and strictness. Strength means strengthening the foundation. In terms of scale, China's capital market is already the second largest in the world, but it is not strong enough. The recent market volatility has once again exposed some deep-seated problems that are worth pondering. Investors are the foundation of the market, and listed companies are the basis of the market. Both investors and listed companies are the source of vitality for the development of the capital market. It is essential to treat investors sincerely, provide better services to investors, further enhance protection of investors through legal, regulatory enforcement, and judicial means, strengthen investors' confidence and trust in the market, attract more investors, especially long-term investors, to participate in the market. At the same time, we must focus on improving the quality of listed companies to enable them to better play their role, enhance investment value, and we will work together with industry regulatory departments, relevant macro-departments, shareholders, local governments, and others to support enterprises in becoming better and stronger, creating a better environment. Fundamentally, we must continue to deepen reform and opening up comprehensively, and consolidate the institutional foundation for the high-quality development of the capital market. As for strictness, it means strict supervision and strict management, focusing on managing the market rigorously according to law and managing the team rigorously according to discipline. The Central Financial Work Conference clearly stated that we must achieve comprehensive regulatory coverage, strengthen institutional supervision, behavioral supervision, functional supervision, penetration supervision, and continuous supervision. We will carefully benchmark and address the shortcomings in regulation in various areas and subjects such as the stock market, bond market, futures and derivatives market. We will closely monitor problem institutions and companies, correcting them early, disposing of risks promptly, cracking down on illegal and irregular behavior as soon as it surfaces, and especially hitting hard on major illegal activities in key areas. For example, fraudulent activities, market manipulation, insider trading, and other illegal activities that touch the bottom line must be severely punished. In terms of team management, we will strengthen internal discipline, ensuring that our team is politically, professionally, in terms of work ethic and integrity, strong and resilient, creating a strong regulatory force. Thank you. Economic Daily Reporter: My question is for Chairman Wu Qing.Seat. You just mentioned that "listed companies are the foundation of the market", investors buy stocks of listed companies. In your opinion, how to improve the quality of listed companies, so that investors can get better returns? Thank you.Time has taken some more stringent enforcement actions, and we will continue to enforce the law strictly. For some major violations and crimes, we will strengthen the coordination of enforcement actions, and in some cases of pursuing criminal liability, we will also pursue civil liability. Just a few days ago, a batch of cases involving market manipulation and insider trading were just transferred for criminal liability investigation, with the aim of maintaining the "three public" order in the market, and more effectively protecting the legitimate rights and interests of investors, making the market more clean and upright, creating a good market ecosystem, and encouraging all market participants to abide by the law, be trustworthy, and fulfill their responsibilities. This is crucial for the stable operation of the market.Of course, it is important to recognize that the market operates according to its own rules and should not be interfered with under normal circumstances. However, once the market severely deviates from the fundamentals and experiences irrational extreme volatility, liquidity shortages, market panic, severe lack of confidence, and other extreme situations, intervention should be resolutely taken to correct the market malfunction. In this regard, we already have some effective practices in place and will further improve relevant mechanisms to firmly guard against systemic risks. Thank you. This article is adapted from the official website of the China Securities Regulatory Commission, edited by GMTEight: Liu Jiayin.