China's reformists moved a little closer to their vision of a socialist Wall Street Wednesday with the formal launch of a centralized securities trading system.
Computer screens flickered in six cities across China, linking for the first time 18 corporations licensed to trade."We had brisk quotes and trading," Zhang Xiaobin, Stock Exchange Executive Council general secretary, told a news conference.
The stock market experiment - a radical departure from the orthodox Marxist tenets of the ruling communist party - is aimed at tapping mountains of unused money to meet the government's budget deficit and fund new industrial projects.
"This is the beginning of something very important but it's got a long way to go," said a Western economist at the opening of the Securities Automated Quotations System.
For the time being, the central government allows trading in only four issues of treasury bonds.
No enterprise bonds or stocks can be traded on the centralized exchange although a handful are bought and sold in local stock markets.
Officials described STAQ as a "Chinese version of the U.S. NASDAQ national market system" and said it was modeled after systems used by the information agencies, Reuters and Telerate.
The birth of STAQ is the first stage in linking China's embryonic stock markets in Shanghai and Shenzhen and licensed brokerages in other cities under one centralized system.
Diplomats said a unified Chinese stock market was still a long way off
because of regional rivalries and political infighting between the central bank and the Finance Ministry for control of STAQ.
Seven minutes after opening, STAQ's first trade was 500,000 yuan ($95,000) of three-year 1989 treasury bills. At an interest rate of 14 percent they are an attractive buy with inflation below an annual 10 percent.
The trade took eight minutes to complete. "Rather long but not bad for start-up phase," said Mr. Zhang.
Unfortunately, as one council official explained, dealers offering a higher price in the central city of Wuhan could not be contacted to clinch the deal because of line problems.
By the end of the seven-hour trading day, STAQ had seen a total traded volume of 3.85 million yuan ($740,000).
"The development of a securities market and securities industry is an object requirement of a planned commodity economy of socialism," said the stock exchange council's vice chairman, Harvard-trained Wang Boming.
Chinese economists said he was wise to choose his words carefully in the aftermath of the June 1989 crackdown on pro-democracy demonstrations, which has seen economic reforms shackled by veteran hard-liners holding the reins of power.
In what diplomats interpreted as an ill omen, no senior government or party figures attended the opening reception in Beijing's Great Hall of the People.
"We really hope that some companies will have their stocks listed - the sooner the better. But there are problems," Mr. Wang said. It was up to the government to decide, he added.
Whether to allow foreign companies to trade in Chinese bonds was still being considered, Mr. Wang said.
"There are no shortages of financial resources in China. The problem is how to get your hands on it," the Western economist said.
More than 1,000 billion yuan ($190 billion) is estimated to be held in savings accounts and stashed under mattresses or buried in peasants' fields.