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China to vote on mutual fund law by year end

SHANGHAI: Top lawmakers are expected to vote on China's first law on investment funds in December which could be implemented by early 2001, the official China Daily Business Weekly reported on Sunday.

The law, under draft since 1998, has been dogged by disputes including ways to classify different types of funds, state media have reported.

The newspaper said the new law was expected to be forwarded to the Standing Committee of the National People's Congress late this year and could be implemented by early next year.

"The formulation of the law will have a dual effect on investment funds in China. It will expand the scale of fund operations, and will exert more pressure on fund managers to adjust their business practices," Xie Taifeng, manager of the research and development centre of Beijing Securities Company, was quoted as saying.

Current laws on investment funds are considered insufficient to meet the rapidly developing needs of China's bourses, it said.

China has about 20 securities mutual funds listed on the Shanghai and Shenzhen stock exchanges with a combined value of about 50 billion yuan ($6 billion) in funds. All of them are closed-end funds that have fixed terms and payment schedules, it said.

There are no foreign-Chinese joint venture funds in the securities industry and a number of brokerages are waiting for the law to be passed so that they can set up such funds, sources say.

China's entry to the World Trade Organisation, which Chinese officials have said was expected this year, may allow such joint venture funds on the market within the next few years, the newspaper said.-Reuters