Review of China’s Stock Market from 2002 to 2014

Abstract

The history of China’s securities exchange can be dated back to the early 20th century, with the first-ever stock in China issued by the China Merchant Steam Navigation Company (established in 1893). In 1914, the Beiyang government enacted the securities transaction law and, in June 1918, founded the first securities exchange in China: The Beijing Stock Exchange. The Shanghai Huashang Stock Exchange followed in 1920. China thus entered the era of stock exchanges during the period of the Republic of China. Being highly lucrative, a number of trust companies and exchanges were set up nationwide, but after the First World War the stock exchange and trust companies began to exploit each other, giving rise to rampant stock speculation. However, trends reversed relatively quickly. As foreign private capital flowed into China and the central bank tightened the money supply, stock prices slumped sharply and many exchanges and trust companies collapsed. The ‘unrest of trust companies and exchanges’ of 1921 began.