China accused of backward step in revision of listed firm rules

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Shanghai, June 17 (CNA) A proposed change by China's top securities regulator that would require listed companies to set up a Communist Party of China (CPC) unit is a step back to the era of the Cultural Revolution, a China-based Taiwanese business consultant has said.

The China Securities Regulatory Commission (CSRC) on Friday unveiled guidelines to improve corporate governance at publicly listed companies that include a requirement to establish a CPC unit inside the company to carry out party activities.

China's listed companies must strengthen efforts on "Communist Party building" among other measures to improve corporate governance, the CSRC said in a statement announcing the measures, which were published on the CSRC website to seek comment from the public.

Asked about the proposed rule changes, a Taiwanese business consultant based in Shanghai who spoke on condition of anonymity said the CSRC already has regulations in place requiring large enterprises to set up a CPC unit in their companies.

The Foxconn Technology Group, for example, has set up a CPC chapter, the consultant said.

But the old rules did not require the establishment of a CPC unit as a condition for a company seeking to list on a Chinese stock exchange.

If the rules announced Friday are implemented, however, foreign companies that want to list on Chinese equity markets will have to set up and operate a CPC organization in their companies, the consultant said.
The new provision "makes us feel like we are returning to the Chinese Cultural Revolution," an ideologically driven campaign launched by Mao Zedong that caused massive social, economic and political upheaval from 1966 to 1976.

But the consultant suggested that the new rules might not scare away foreign investors because of the huge benefits of listing their companies on Chinese stock markets.

The revised rules came as China is making efforts to beef up political and ideological education, the consultant said.