Development of Corporate Governance Practices and Capital Market Reforms in China

Abstract

We primarily review the historical development of corporate governance in China after the country opened up to the outside world in the early 1980s. Besides the introduction of the major progresses of corporate governance in practice, we illustrate several key policies with distinct Chinese characteristics that have been implemented in more recent years, along with their practical consequences. It is also outlined that the improvement of corporate governance and capital market reforms supplement each other along with the rapid economic growth in China. By analyzing relevant statistical data and representative company cases, we identify several persistent issues in current corporate governance practices, including the impact of corporate environmental, social, and governance performance and the implication of the digital transformation of the business environment. Building on this analysis, we propose future directions for the development of corporate governance, aiming to further the refinement of both corporate governance and capital market reforms in China. We trust that Chinese corporate governance practices can offer valuable insights for other countries toward the continuing improvement of corporate governance on a global scale.

Received: 27 August 2024 | Revised: 4 November 2024 | Accepted: 19 February 2025

Conflicts of Interest 

The authors declare that they have no conflicts of interest to this work.

Data Availability Statement

Data sharing is not applicable to this article as no new data were created or analyzed in this study,

Author Contribution Statement

Qidi Zhang: Methodology, Software, Validation, Formal analysis, Investigation, Data curation, Writing – original draft, Visualization. Zhijun Lin: Conceptualization, Methodology, Validation, Formal analysis, Investigation, Writing – review & editing, Visualization, Supervision, Project administration.