Guest Lecture: Carl Walter, 2011

Abstract

It is hard to think back to 1990 when China re-established its stock exchanges. In a socialist country with a history of no private property it's a valid question to ask: why develop stock exchanges and not debt markets? The reasoning lay in the continuing poor performance of state-owned enterprises. The government believed that by altering the ownership relationship between the state and the enterprise better performance could be the result. But what supercharged this proposition was the decision to allow enterprises to list their shares on overseas markets in Hong, New York and London. What did China get out of this experiment? The greatest positive gain was that for the first time in its history the country developed a nation-wide market for capital. This enabled it to grow national enterprises that are positioned to compete internationally. On the negative side, these huge enterprises, called the National Team, are the biggest beneficiaries of the status quo and their very political power makes further economic and therefore political reform problematic.

Carl E. Walter has worked in China’s financial sector for the past 20 years and has actively participated in many of the country’s financial reform efforts. He was a member of senior management at China International Capital Corporation, China’s first and most successful joint venture investment bank where he supported a number of significant domestic and international stock and bond underwritings for major Chinese corporations. More recently at JPMorgan he was China Chief Operating Officer, and helped build a pioneering domestic security, risk and currency trading operation.

 Carl E. Walter holds a PhD from Stanford University and a graduate certificate from Peking University. He is the co-author of Red Capitalism: the fragile financial foundations of China’s extraordinary rise as well as Privatizing China: inside China’s stock markets.