ABSTRACT
In 1990, China became the first communist nation in the world to have a Stock Exchange with the formal establishment of the SHSE. Five Chinese companies became the first batch of firms listed on the official Exchange. This was a result of China’s determination to establish a market-oriented economic system through economic reform and openness to the world, though doing so in a gradual evolutionary manner. The general principle guiding this gradualist approach to reform in China is that every new institutional change should be first implemented in one geographical area or industry sector, before being later put into wider application when the paramount leaders believe it is good for the rest of the economy. This top-down approach has been criticised by many but, at least until now, the Chinese economy appears to be performing well in comparison to other transitional economies, many of which have experienced serious difficulties and which look likely to experience further difficulties in the future.
