China regulator pledges deeper market reforms Yao Gang, vice-chairman of the China Securities Regulatory Commission, pledged to "deepen" China's capital markets reforms and make sure that Hong Kong is one of the main beneficiaries of those reforms. Speaking at the Asian Financial Forum in Hong Kong, Mr Yao said the CSRC would lower the threshold for Chinese companies listing in Hong Kong and "open the door wider for small and medium enterprises to list in Hong Kong." The move comes as the Chinese government is under pressure to do more for China's private companies, which now provide the bulk of economic growth and jobs. These companies have been relatively more hurt by the banks" tight credit policies than their competitors in the state sector. "In terms of both policy and finance, privately-owned companies don't have the advantages of state-owned enterprises," said John Zhao, founder and head of Hony Capital, a Chinese investment firm. In overcoming the crisis, the policy again favoured the soes and presented more pressure on the privately-owned enterprises. Relaxing government controls would help. Mr Yao added that the regulator will extend the renminbi quota for qualified foreign institutional investors to Rmb200bn. He also reiterated earlier promises from officials that China is considering introducing A-share index ETF products that would be listed in Hong Kong as well as sanctioning more renminbi-denominated bonds and shares in the city. "He has reaffirmed China's commitment to reform," said Anita Fung, chief executive of Hong Kong for HSBC. Still, many in the audience felt that Mr Yao's speech showed just how reluctant regulators remain to relax the rules. Despite Mr Yao's pledge to "upgrade" requirements for Chinese firms listing in Hong Kong, the quota system as a whole (the source of much of the power of the CSRC), remains intact. And despite all the talk of expanding quotas for foreign investors in Chinese financial markets, the quotas remain almost laughably small, whether for the major international asset managers or sovereign wealth funds. "They used to talk in Beijing of crossing the river by feeling the stones," said the head of government relations at one major international bank. Now they just feel the stones. Indeed, many of the speakers from the mainland also called for more bold changes. For example, Tu Guangshao, vice-mayor of Shanghai, called for China to let interest rates float freely, at a time when the combination of artificially low rates on both deposits and loans and tight controls on bank credit have spawned a huge shadow banking system. "The biggest risk is shirking from reforms," said Tomson Li, chief executive of TCL, a Chinese consumer electronic maker. Under its new chairman, Guo Shuqing, the CSRC is expected to quicken the pace of change.