China issues first capital market guideline

China's cabinet, the State Council, on Friday unveiled the guiding principles of regulations for the capital market in coming years.

The first guideline envisions a multi-tier capital market by 2020 with a proper structure, functions and regulations, high efficiency and inclusiveness.

To boost the healthy development of the capital market, the guideline laid down nine targets that Chinese authorities will strive to attain in the coming years, including dealing with government-market relations,innovation and mixed ownership.

The approval-based stock issuance system will be replaced by a registration-based one and the delisting regime will be improved.

The guideline provides for diverse bonds to meet different investment needs and steps up supervision of the bond market. Approval of private equity issuance will be lifted and capital raised through private equity will be encouraged to fund small enterprises. The futures market will be diversified through resource commodity futures.

Monitoring of systemic risks will be paramount and authorities will toughen the punishments for breaches of laws and regulations.