Interview With Fan Yongjin, Party Secretary And Vice Chairman Of Aijian Group: China'S Capital Market Has Set Sail Before The Establishment Of The Exchange

In the 30 years of the magnificent development of China's capital market, fan Yongjin, who was born after "60", has become a witness of many major events because of his unique working experience.

Fan Yongjin has been engaged in research, legislation and management in Shanghai Institute of international trade and economics, Shanghai Working Committee on foreign investment, Shanghai securities administration office, Shanghai Leading Group Office for asset restructuring of listed companies, Shanghai financial service office and other units. He has experienced such important work as utilizing foreign capital, developing and opening Pudong, developing stock market and building international financial center Major events and historical process.

He has witnessed most of the key nodes in the development of the capital market in the past 30 years: the opening of the Shanghai Stock Exchange in 1990, the birth of China's first B-share company in 1991, the restructuring and listing of a large number of enterprises in 1992, the assets reorganization of the first wave of listed companies in 1997, the delisting of the first listed company in 2001, and the promotion of the split share structure reform in 2005.

In 2012, fan Yongjin was transferred to Aijian, the first private enterprise since China's reform and opening up, as the party secretary and chairman of the board.

With a series of experiences, fan Yongjin has not only the macro vision of government work, but also the micro experience of enterprise management. He has a deep observation and insight into the capital market.

In 2016, after the restructuring and restructuring of Aijian group, fan Yongjin remained as secretary of the Party committee and vice chairman, still active in the capital market.

The bond between memory and capital market: never leave the financial field

21st century: would you please tell us something about your connection with the capital market.

Fan Yongjin: in the mid-1980s, in the early stage of reform and opening up, Shanghai was faced with transformation pressure and dilemma. In 1988, when Zhu Rongji was elected mayor of Shanghai, he launched an important measure, that is, the establishment of the Shanghai Working Committee on foreign investment (hereinafter referred to as the "Municipal Foreign Investment Commission") and concurrently served as the director in person. He hoped to create an authoritative and service-oriented organization and accelerate the introduction of foreign investment. I was one of the first batch of staff who went in after the establishment of the Municipal Commission of foreign investment. I had the honor to participate in and witness many important events, including the preparation in the early stage of Pudong Development and opening up, and raising foreign capital for the construction of Nanpu Bridge. I have the honor to participate in a series of pioneering foreign-related economic legislation in the Municipal Commission of foreign investment. At that time, I also boldly participated in the research and proposed to attract foreign capital through the trial implementation of the joint-stock system and explore a new form of Sino foreign joint-stock enterprises. This was a new concept put forward by Shanghai at that time. Sino foreign joint ventures such as Squibb and United woolen textile enterprises made a pilot request. Later, the leading stock of Shanghai's "old eight stocks" became the first company to issue B shares.

During the period of stock market reform, Shanghai Securities Regulatory Commission and other large-scale companies were involved in the reform of Shanghai Securities Regulatory Commission in April 1993.

When the Asian financial crisis broke out in 1997, the central government held the first national financial working conference and decided to put the local securities management departments under the CSRC. Under this background, if Shanghai wants to continue to do a good job in asset restructuring and securities related work of listed companies, it is necessary to set up a new institution. Therefore, it is decided to set up the leading group office for asset restructuring of Listed Companies in Shanghai (hereinafter referred to as "Restructuring Office") as a separate institution. In March 1999, I was transferred to the Restructuring Office as director, responsible for the formation and development of this new organization.

In September 2002, starting from the strategy of building an international financial center, the Shanghai municipal Party committee and government established the Shanghai Municipal Financial Service Office (hereinafter referred to as the "municipal financial office", which was changed into the Shanghai Municipal Financial Work Bureau in 2018), and clearly reorganized and reorganized the system to transfer to the municipal financial office. I was transferred to the post of deputy director of the municipal financial office. I was in charge of the reform and development of listed companies and capital markets, financing of small and medium-sized enterprises, local new finance, and the construction of Shanghai international financial center. One of the most important tasks is to participate in the reform of non tradable shares of listed companies. In April 2005, the reform of non tradable shares was officially launched, and the work of Shanghai stock reform also started. As of 2007, 138 of 148 listed companies in Shanghai have entered the share reform, and 72 local state-owned listed companies in Shanghai have completed the share reform. Shanghai's share reform work has taken the lead in China, which has also created conditions for Shanghai's listed companies to innovate and develop in the next step. After working in the financial office for 10 years, I was transferred to Aijian company in 2012.

Looking back on my work experience, I have three deep feelings: first, feeling the strategic vision of leadership. Marked by the development and opening up of Pudong and the opening of Shanghai Stock Exchange in 1990, Shanghai has again become the vanguard of reform and opening up from a guard in the 1980s. Both the Central Committee and Shanghai leaders have very forward-looking strategic thinking on Shanghai's development. Second, Shanghai has indeed seized the historical opportunity and achieved great strides and leapfrog development. Third, the speed and effectiveness of Shanghai's development is amazing, which can be called a miracle. However, the road is tortuous. We need to coordinate and deal with the complicated situation at home and abroad. What tests us is political wisdom, strategic courage and mission.

China's capital market starts to break ice: there were many innovative breakthroughs before the establishment of Shanghai Stock Exchange

21st century: some people say that "the 30 years since the establishment of Shanghai Stock Exchange is also the 30 years of China's capital market". What do you think of this statement?

Fan Yongjin: the Shanghai Stock Exchange has been established for 30 years, which is also China's capital market for 30 years. Objectively, there is also a practical situation. Before 1990, the Shanghai stock market had broken the ice and set sail. There had been pilot joint-stock system, enterprises had issued stocks, and there were also places for stock trading. Among them, the most influential events were:

The first thing is that when Aijian company was founded in 1979, it boldly created the subscription system, and also established the corporate governance structure with the embryonic form of modern enterprise system, such as the general meeting of shareholders, the board of directors, the board of supervisors, and the management. Aijian company is the first private enterprise in China since the reform and opening up, which was founded by Shanghai original businessmen and some overseas people, represented by Liu Jingji and Tang Junyuan, on September 22, 1979. When Aijian company was founded, due to the "left" thinking, it was impossible to have the formulation and practice of private enterprises and joint-stock system. For this reason, the older generation of Aijian, relying on the experience of corporate governance accumulated in Shanghai's industrial and commercial circles in the past, boldly innovated and used the subscription system instead of the share-holding system. The specific method is to collect funds and subscribe funds, which is consistent with the nature of the current joint-stock system.

The second thing was that on November 18, 1984, Feile audio ("xiaofeile") issued 10000 shares with a par value of 50 yuan per share to the society, becoming the first enterprise to publicly issue shares after the reform and opening up. In fact, the subscription system created by Aijian also promoted the birth of the joint-stock system. Qin Qibin, chairman of "xiaofeile", recalled many times that it was following the example of Aijian to implement the shareholding system. Huang Guixian, general manager of Jing'an securities business department, also stressed that Aijian company was the pioneer of Shanghai stock system after reform and opening up.

The third thing was that on September 26, 1986, Jing'an branch of Shanghai Trust and investment company of ICBC established the first stock trading counter in China. On November 14 of that year, Deng Xiaoping presented Feile audio stock to John verslin, chairman of the New York Stock Exchange. At that time, Zhou Zhishi, vice president of the Shanghai Branch of the people's Bank of China, was the holder of the Feile audio stock at that time. On the afternoon of November 23, he went to Jing'an branch of ICBC trust company to handle the stock transfer procedures. This activity has caused great repercussions at home and abroad, which is known as "the chairman of the largest stock exchange in the world and the smallest securities business department in the world converge here". According to the judgment of the outside world, "China's determination to reform and open up is firm.".

In addition, on April 1, 1987, the reorganized head office of Bank of communications officially opened business in Shanghai, becoming China's first national state-owned joint-stock commercial bank, which is also the only one of the five state-owned banks with its head office in Shanghai. Bank of communications is the forerunner of China's financial system reform. It has opened up the way for the development of China's joint-stock commercial banks and played an exemplary role in financial reform. In addition, three securities companies, Wanguo, Shenyin and Haitong, were established in Shanghai in 1988. These three companies have a position and influence in the history of Chinese securities.

Therefore, before the opening of the Shanghai Stock Exchange in December 1990, Shanghai had made a lot of innovative and breakthrough measures in the capital market. Of course, in those years, Beijing and Shenzhen also made a lot of brewing research and exploration work, which laid a certain foundation for the establishment of the capital market. After Comrade Xiaoping's talk in the south in 1992, China's capital market began to usher in unprecedented development.

Early exploration and characteristics of capital market

The 21st century: what are the characteristics of the capital market at the beginning of its establishment?

Fan Yongjin: the birth and development of the capital market, at the beginning, there was a lot of controversy about the birth and development of the capital market. Fortunately, the leaders from the Central Committee to Shanghai were very concerned. From the very beginning, China's capital market has been developing in the direction of four modernizations, namely, scale, legalization, marketization and internationalization.

The first is scale. Xiaofeile stock was born in 1984, and Shanghai Jing'an securities business department appeared in 1986. When it opened, there were only two stocks, namely Feile sound and Yanzhong industry. In June 1990, Zhu Rongji announced in Hong Kong that the Shanghai Stock Exchange would be opened within the year. Previously, when he held an enlarged meeting of the Standing Committee of the municipal Party Committee on December 2, 1989, many comrades felt that it was impossible. At that time, there were seven or eight listed companies. From the strategic point of view, the company's strategy plays an important role in promoting its development. When Shanghai Stock Exchange opened on December 19, 1990, there were only eight stocks, known as "old eight stocks"; Shenzhen Stock Exchange opened with five stocks. In 1992, as the foundation and leap forward year of the stock market, Shanghai launched the stock subscription certificate, and as many as 53 companies issued shares throughout the year; the Shanghai Stock Exchange cancelled the price limit and innovated, and there was no paper stock since 1992; the Shanghai Stock Exchange has also massively absorbed securities operating agencies from all over the country as members, and greatly increased the number of trading seats on the exchange from 25 at the beginning to more than 500 at the end of 1992 In October of that year, China Securities Regulatory Commission was established. At the beginning of the pilot project, the stock exchanges of Shanghai and Shenzhen were local, and the selected listed companies were also local, but the shareholders were just nationwide. Therefore, we have been pursuing large-scale or nationalization. We didn't expect that listed companies are blooming everywhere, and the daily trading volume often exceeds one trillion yuan.

The second is legalization. The capital market is the most market-oriented. It involves the interests of shareholders and the supporting reforms in all aspects. In 1990, Lou Jiwei was deputy director of the Shanghai Municipal Office of restructuring. At that time, the Municipal People's Bank of China and the Municipal Foreign Investment Commission worked out a lot of regulations. On November 27, 1990, a few days before the opening of the Shanghai Stock Exchange, the Shanghai municipal government promulgated the measures for the administration of Shanghai securities trading, which was formally implemented on December 1. At the national level, the company law was introduced in 1994 and the securities law was introduced in 1997. These are important milestones in legalization. Fortunately, I was deeply involved in many important work in that year. For example, Shenyin Securities encountered some legal problems when negotiating with foreign parties on the underwriting of vacuum B shares. Because B shares are sold to foreign investors and priced in US dollars, we would like to write "applicable Chinese laws", and the foreign side asked "do you have relevant laws in China"? In the end, we have no choice but to apply the British law. Finally, considering the international influence and favorable distribution, we wrote that if there is any dispute, we should go to the Stockholm arbitration court in Sweden for arbitration.

The third is marketization. As the old saying goes, the stock exchange is the Pearl in the crown of capitalism. At that time, it actually took a lot of political risks to engage in joint-stock system and stock market. In fact, great adjustments should be made at the micro enterprise level and the macro system level. When we talk about foreign-funded enterprises and joint-stock enterprises, they are actually two-way or multi-party investments, especially the joint-stock system Joint ownership. With the establishment of the joint-stock system, money will come in, and the mechanism will also change. Therefore, in this respect, capital investment and enterprise mechanism are just like "flour" and "water". When there is more flour and water, water will add flour. Finally, qualitative changes have taken place. This is how we came here step by step.

The fourth is internationalization. When Mr. Ye, director of the board of directors of the board of directors of the B-share market in Shanghai, asked Mr. Ye Chang, the vice chairman of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the board of directors of the Contact work. A number of suggestions on the implementation of the joint-stock system by foreign investors published in the "Shanghai Daily" in 1989 have been put forward. It is suggested that after issuing B shares, when the foreign capital in Sino foreign joint ventures accounts for more than 25%, they can enjoy some treatment of foreign-invested enterprises, such as "two exemptions and three reductions" in enterprise income tax. In addition, it was also proposed by the Municipal Foreign Investment Commission, an important institution, that Shanghai should rebuild its international financial center and restore its status as a financial center in the Far East in the 1920s and 1930s.

Looking back on the hard journey of the capital market, I find it really difficult. In fact, in our early exploration, we carried out the four modernizations at the same time, and the direction was completely right. Now we should say that we have succeeded.

The role of capital market in revitalizing Shanghai and developing Pudong

21st century: looking back on the past, on the whole, what do you think is the internal relationship between the development of capital market and the revitalization of Shanghai and the development of Pudong?

From the perspective of the 30th anniversary of Shanghai Yongjin's opening up, it is closely related to the 30th anniversary of the opening up of Shanghai's capital market. I feel that there are three important measures to revitalize Shanghai.

The first measure is the establishment of the Municipal Commission of foreign investment. Previously, the approval of a foreign-funded project often required five commissions, 20 bureaux and more than 40 seals, and at most 126 seals. The Municipal Commission of foreign investment implements "one organization, one window and one seal" to provide one-stop examination and approval management services for foreign-invested enterprises. It has done a lot of fruitful work, and has led to a good situation in which more and more foreign investment can be utilized in Shanghai. This is a major innovation breakthrough in the traditional management system. While improving work efficiency, it also expands the reputation and influence of Shanghai.

The second major measure is to develop and open Pudong. The development and opening up of Pudong is a strategic measure of the central government to Shanghai. From Deng Xiaoping's speech, we can see several considerations of the central government's development and opening up of Pudong. First, when it came to the international concern that we would "take over", the development and opening-up of Pudong meant that our reform and opening-up policies would not change, and that further reform and opening-up should be carried out; second, that Shanghai was our trump card, and that it was a shortcut to build Shanghai; and third, China's financial policy Shanghai is the first place to gain international status.

The third measure is to establish a capital market. We have explored for nearly 10 years in the early stage, from the 1980s to the 1990s; in the later stage, the capital market has been gradually nationalized; and since 2000, we have built an international financial center. There are two important aspects: one is the leadership's strategic vision, family and country feelings and wise decision-making; the other is that there are a group of pioneers, such as Li Xiangrui, Gong Haocheng, he Haosheng, Qin Qibin, Xue Wenhai, Huang Guixian, Guan Jinsheng, Kai Zhidong, Wei Wenyuan, etc., who are constantly trying at great risks. Now we can see that the development of the capital market has not only brought huge funds to investors, but also formed a new market mechanism, as well as a matching modern enterprise system, as well as a whole set of practices to adapt to the market economy.

Huang Ju, former mayor and Secretary of Shanghai municipal Party committee, then member of the Standing Committee of the Political Bureau of the CPC Central Committee and vice premier of the State Council, once said that in order to revitalize Shanghai in the face of lack of development funds and construction experience, it is necessary to make good use of "three big pieces of money", one of which is the money of foreigners. The establishment and efficient operation of the foreign capital committee actually turned the corner for Shanghai to introduce foreign capital and develop its economy One is the money of the "ancestors". Therefore, in the policy of Pudong's development and opening up, the land lease plays a very important role. The area of Pudong (after the merger of Nanhui and Nanhui) is larger than that of Hong Kong, equivalent to two Singaporeans; the other is the money of National shareholders, which means the money to revitalize the capital market. Facts have proved that the revitalization of Shanghai is mainly to make good use of these three large funds.

Restructuring and delisting are effective ways to improve the quality of listed companies

21st century: in the development process of Shanghai stock market, what else impresses you?

Fan Yongjin: after the development of the Shanghai stock market, it soon ushered in a process of great waves and sands, including the "old eight stocks" which later changed a lot. Some companies have achieved great development through their own operation and capital operation, and have become the vanguard of system, industry and regional development, as well as outstanding stocks and leading stocks in the securities market; some listed companies, due to various reasons, have lost the function of refinancing and even suffered losses year after year, which are called "death plate" by the market. In this context, the emergence of a surge of listed companies asset restructuring.

The original intention of establishing the reorganization office in Shanghai is to solve the quality problems of listed companies and activate the ineffective listed companies. It is necessary to put forward the document of high-quality talents and excellent enterprises to the municipal government in 1999. From 1997 to 2000, Shanghai explored various ways of listed companies' equity transfer, asset replacement, merger and acquisition, shell merger, share buyback, etc., so as to give full play to the function of the stock market in optimizing resource allocation and better embody the mechanism of survival of the fittest. In addition, a set of working methods, a series of models and examples were summarized, which were affirmed and supported by China Securities Regulatory Commission (CSRC) and extended to the whole country extension.

Another landmark event was the delisting of Pt Narcissus, the first listed company, in April 2001, which I was also responsible for. The delisting of Narcissus has put pressure on listed companies and made investors realize the risk of buying stocks. However, to be honest, it is not really delisting, because there is no bankruptcy liquidation, but it is only transferred to Shenzhen third board. Now, there are new regulations on delisting, and the intensity of delisting will be greater, but it is very beneficial to the long-term development of the capital market.

Looking into the future: focusing on the role of domestic and international coordination

21st century: in recent years, the financial sector has been opening up greatly. In combination with your early work experience, how do you see the impact of foreign investment on financial openness?

Fan Yongjin: because of the different background, the situation in the early years is very different from that now. In the early years, many of them started to explore and made some efforts, but their effects may be limited. But now that we are the world's second largest economy, we want to build an international financial center. Generally speaking, I think it is right to break through the upper limit of foreign investment proportion, and the opinions issued are all conducive to development. The core is how to implement the specific problems, how to find some visible, benchmarking, replicable things, to promote, we need to make precise policy, these work in-depth is of great significance.

In addition, we should actively explore and promote the internationalization of capital market with an open mind. On the one hand, the capital market itself needs linkage, such as the establishment of an international financial center, the implementation of the "double cycle", the supply side reform and so on. At present, we have to face the pressure of opening up to the outside world.

The rise of a big country is closely related to financial centers and capital markets. In particular, many of the top 500 companies are listed companies. If we attract foreign high-quality enterprises to come to China for listing, the impact will be very different. Therefore, I think that in this regard, we should constantly strengthen the construction of the market system, there is a problem of the transfer of discourse power and control power, and we should gradually take the lead Right.

21st century: the registration system reform has been proposed and implemented. What do you think is the greatest value of the registration system reform?

Fan Yongjin: the value is still very big. Prior to this, we have long emphasized the examination and approval rather than the management. There were a lot of checks and controls in front of us, but there was insufficient management and supervision at the back. Many of them have adopted the registration system in Singapore, which is a common practice. In the future, the reform should attach equal importance to international integration and efficiency improvement. In addition, innovative enterprises may have no value for the time being, but they will certainly have value in the future. We should also actively support them. We should not raise the threshold as high as before, leading to the loss of a lot of good resources because some good enterprises can only be listed abroad. This phenomenon is also due to the fact that in the early years, our market was relatively small and the level was limited, which could not accommodate these enterprises. Now, with such rapid development, we should have more and more conditions.

21st century: where do you think the current capital market should go?

Now we are forced to innovate. Of course, this kind of innovation must conform to the law and common sense. What is effective abroad should be digested.

I think we should take into account the following aspects. Some enterprises need good support. Some high-tech and innovative enterprises should support as well as basic enterprises. Because the capital market is multi-level, we can't focus on one end. Sometimes, if many resources are concentrated at one end, there will be problems. On the other hand, there should be top-level design and long-term consideration. Investors should have a wealth effect. In the long run, there can be ups and downs, but there must be an upward trend. Secondly, I think we should consider the role of domestic and international coordination in the future. At present, the construction of international financial center should focus on overseas factors, and at the same time guard against the risks brought about by opening up. What's more, it is necessary to deal with the relationship between the virtual economy and the real economy, and the virtual economy should make great progress in serving the real economy.

21st century: what are your suggestions on protecting individual investors?

Fan Yongjin: I personally believe that China's "retail investors" have made historical contributions and can not die out in a short time. Professional institutions are also developed later. For retail investors, it is necessary to carry out publicity and protection. Now it is also right to set the threshold and explain the rules clearly to everyone. However, it is also necessary to strictly prevent insider information and related transaction fraud, so the protection regulations and supervision should go hand in hand. To protect the interests of investors, it is an important task to cultivate a group of truly healthy investors. Now this foundation is getting better, but we still need corresponding supporting measures to create a good investment environment. I am confident in the future of China's capital market.