Chinese Premier Wen Jiabao's promise to protect the legitimate rights of minority shareholders in his address to the annual National People's Congress (NPC) session on Saturday has been welcomed by the country's investors, who have suffered heavy losses on the stock markets over the past four years.

Rampant market irregularities by listed firms, lack of action from regulators to crack down on the irregularities, and structural problems have been blamed by experts and investors for the bearish market performance during the past four years. Most minority stock holders, totaling tens of millions, have been bitter about the situation as they have lost heavily during the period.

Chinese stock markets hit five year record lows during the past two months despite the Chinese economy has been growing at an average annual rate of 9.5 percent during the past 27 years.

Mr. Yan, a 48 year-old investor in Beijing, said the promise, which is unprecedented in the annual NPC address, sent a clear message to investors that government departments will bear that in mind when dealing with things involving the securities sector.

Regulating the market according to law is of vital importance for the recovery of investors' confidence, said Yan.

He said the Chinese stock markets would be less risky for investors if the regulators, the listed firms, securities firms, accountants' offices are all honest and act strictly in accordance with law.

Some Chinese listed firms, mostly State-owned ones, have been found to fabricate figures to fool investors in their public offerings, and make promises they never intend to honor, yet few firms were given severe punishment they deserve.

Zhang Gengxin, another investor, said few managers of listed firms raised millions of US dollars from the markets by deliberately using false information. But, "their maximum punishment is usually just jail terms of several years or fines worth merely 10,000 US dollars."

Yu Liang, 68, said people have no confidence in the stock markets as it is too risky to invest in the markets since many listed firms do not respect the legitimate rights of minority stock holders

The Shanghai Composite Index, which covers yuan-denominated A shares and foreign-currency B shares, stands below 1,300 points after hitting five-year lows late last year from about 2,100 points in 2001.

But most experts said the lackluster market performance on Chinese stock markets irregularities has been caused by the fundamental structural problem -- the split share structure resulting from the planned economy.

This refers to the existence of a large volume of non-tradable State and legal personal shares and the fact that only about one-third of the shares in domestically listed companies are floated on the market.

Such an irrational structure has put the public investors at a worse position than the actual controllers of the listed companies in making corporate policies and disposing of the companies' profits and assets.

Regulators say the central government is considering ways to solve the long-standing problem.

(Xinhua News Agency March 9, 2005)