Corporate Governance in China Improving Slowly

International Corporate Governance Blog just ran a post entitled, "Corporate Governance in China Improving Slowly."  The post cites a just released report from the Institute of International Finance, concluding that China has made substantial strides in its corporate governance of its publicly traded companies since the Institute's last report in 2003. This institute is made up of representatives from nearly all the big financial players (including, Franklin-Templeton, ABN Ambro, Citicorp, UBS) and its report is comprehensive and very incisive. 

The report also states that it expects China's recently enacted New Company Law to accelerate the improvements in corporate governance in China.  However, the report also notes that China still has quite a ways to go before it even achieves the level of corporate governance the Institute expects from developing countries and it also pointedly notes that China's stock markets were among the ten worst performing equity markets in the world in 2005. 

Bottom Line:  China's corporate culture is not yet generally imbued with a recognition of the importance of corporate transparency and China's laws are not yet strong enough to force it.