"The draft of the law is scheduled to be submitted to the National People's Congress (NPC) Standing Committee for a first review in August," said Wang Lianzhou, director of the law's drafting group under the NPC Standing Committee.

Drafts of the law have been revised four times since late 1999.

Wang said the latest draft will have three hearings before final approval by the NPC Standing Committee. Each step is expected to take two months, so the process would take six months altogether.

"If successful, the final debate on the draft of the investment fund law would be in December," Wang said.

Wang added that major issues remain unresolved,including whether the law should govern only the securities fund or also regulate the industrial fund, securities fund and venture capital funds.

"The growth of a mature financial market in overseas markets indicates that the law should include regulations of all types of funds," said Wang, who is also a key expert involved in drafting the Company Law and the Securities Law.

"We are now busy preparing for the NPC's first review," said Wang. More revisions are likely before this August.

Speaking at an open-end fund forum held here by the Development and Research Centre under the State Council Friday, Wang defied speculations that China's first open-end fund, another hot topic in China's stock market, would be kicked off after the formal release of the law.

Instead, he said the open-end fund would be governed by regulations of the open-end fund released by the China Securities Regulatory Commission in October.

Apart from the open-end fund rules, China passed its first set of rules governing the investment funds in 1991.

He predicted that China's first trial open-fund law would be launched in the first half of the year.

"A lot of companies, including fund management firms and commercial banks, have prepared diligently, and they are now waiting for final approval from the authorities," Wang said.

The market is abuzz with rumours that Shanghai-based Hua'an Fund Management Co would be the first to be given the go-ahead for the launch of the open-fund this month.

To date, China has 10 fund management companies governing the operations of 33 funds, but all these funds are close-end funds.

Release of the law would be a great stimulus for development of the funds market in China, said Xie Ping, director of the Research Bureau with the People's Bank of China, China's central bank.

And the release of the law would boost China's stock market because the move would encourage an influx of capital from commercial banks, Wang said.

(China Daily 03/05/2001)