BEIJING (Reuters) - China's top securities regulator reiterated commitments to easing the government's control over the initial public offering (IPO) process on Tuesday, but said the government will also intensify its auditing of companies hoping to list.
"We will unswervingly push forward stock issuance registration system reform and truly give power to the market and investors," Xiao Gang, chairman of the China Securities Regulatory Commission (CSRC), told a financial forum, according to remarks posted on the commission's web site.
"This does not mean that the CSRC will sit idly, which will lead to more junk stocks," he said.
The CSRC has implemented a defacto freeze on IPOs since late 2012. While the stated reason for the suspension of approvals for new initial public offerings was to clean up fraud by forcing underwriters review the accuracy of pending IPO applications, the ban was widely understood to be an effort to prop up the chronically weak stock market by restricting the supply of new shares.
Lifting the ban would signal that policymakers are willing to abandon such market interference. Xiao's comments could imply the government is going to take its time before doing so.
Detailed reform plans released on Friday after a party meeting pledged to "push forward stock issuance registration system reform", suggesting firms seeking to tap equity markets will no longer depend on official approval.
The reform will bring China's IPO vetting process closer to that in developed countries where firms register their IPOs and go through a rigorous audit before listing.
Xiao highlighted the need for reforms as the stock market is marred by a host of problems, including artificially high share issuance prices, high price-to-earning ratios and the use of dominant positions by big shareholders to harm small investors.
He also said China will allow more qualified foreign investors to enter China's stock market, but conditions are not ripe for China to launched a long-awaited international board.
(Reporting by Kevin Yao; Writing by Pete Sweeney; Editing by Matt Driskill)