I. V. VAKHRUSHIN Candidate of Economic Sciences Key words: China, stock market, global crisis Despite the turmoil of the global financial crisis, the stock market of China (Shanghai and Shenzhen exchanges), in terms of market capitalization*, essentially shares the 2nd-3rd place in the world with Japan. So, in June 2010, it ranked 3rd ($3.07 trillion)1 after Japan ($3.1 trillion)2, but before that sometimes came out on the 2nd place. The largest national stock market, which is several times larger than all others, remains the United States ($11 trillion) 3. The key feature of the development of the Chinese stock market is to take advantage of the entire experience of Chinese economic transformation, which consists in a gradual, well-planned reform of the economic system under strict state control. THE BASIS IS THE CORPORATIZATION OF STATE-OWNED COMPANIES The formation of the Chinese stock market was based on the mechanism of corporatization of state-owned companies with the allocation of 3 different segments of shares (non-market shares of the state, non-market shares of legal entities and market shares). This approach allowed the Government to retain a controlling stake in the absolute majority of listed companies. As a result, the Chinese stock market is characterized by a high concentration of ownership in the share capital of companies. As a rule, in countries with this type of equity market, the national economy is dominated by debt financing of the economy (including bank loans and bonds), since controlling shareholders are not interested in selling shares, leading to a reduction in their ownership share, and resort mainly to loans. The high share of non-market shares makes the indicator of the market capitalization of the Chinese stock market largely artificial, not reflecting the real role of the market in financing the economy. However, the free market capitalization of the equity market (the free float level), which reflects the share of free-float shares ... Read more