CHINA could also become the world’s main supplier of capital as it rolls out financial market reforms that could free up billions of dollars in savings for investment, a panel of experts said yesterday.

But while the reforms try to address long-standing barriers to capital market development in the world’s fastest growing major economy, they could lack teeth if poorly implemented.

“We have so far seen China as a manufacturer of cheap goods, in future it may be seen as a major supplier of capital,” Stuart Leckie, senior advisor at Britain’s index provider FTSE Group, said at the launch of a report on China’s capital market.

Leckie said he expected the Shanghai stock market, the largest in Asia outside Japan, to start attracting listings of foreign companies as it becomes more driven by institutional investors and less by individuals.

China’s main stock index has more than doubled so far this year in a bull run stoked by profit growth by firms in the January-September period.

As a result, the Shanghai Stock Exchange has become the world’s sixth-largest bourse by capitalization.

The increased presence of institutions in stock markets was also being driven by the Qualified Foreign Institutional Investor (QFII) program, the report said.

The report, published by accounting firm KPMG, in association with Xinhua Finance, FTSE Group and Fitch Ratings, predicted the quota for the program, which allows selected foreign institutions to invest in Chinese securities, would be raised to US$30 billion by the end of this year from US$10 billion.

Regulators were also trying to reform the bond market which had taken a back seat to the stock markets in terms of activity, the panel said. (SD-Agencies)