BEIJING, May 25 -- China sees its stockmarket as significant to the overall health of its economy but will not be pumping in public funds to prop them up anytime soon.

    China Securities and Regulatory Commission (CSRC) chairman Shang Fulin told the Financial Times the problem had to be resolved gradually by shareholders of each company rather than through an ambitious government-led plan.

    ¡°The CSRC or any other government authority are not in the position to produce a solution or impose a plan,¡± said Shang.

    ¡°We believe that the overhang of non-tradeable shares should be settled between the two types of shareholders by consultation and negotiation.¡±

    In April the CSRC chose four companies as a first step to an experimental program under which the non-tradeable shares would be listed and the government's massive holdings that make up around two-thirds of the stockmarket's more than US$400 million in market capitalization would be gradually reduced.

    Shang said the response had been positive, but did not say when the next companies would be named or how quickly the regulator planned to proceed.

    Shang said the CSRC was discussing a plan with other parts of the government to increase the amount overseas investors could put in China under the Qualified Foreign Institutional Investor scheme.

    Shang also said investors in listed companies would not be compensated for dilution of their holdings through the sale of State-owned shares.

    But owners of non-tradeable shares, in other words the government, should pay a certain amount to shareholders to have the shares listed.

    (Source: Shenzhen Daily/Agencis)