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8. Conclusion: privatizing through groping for stones SHARE CONVERSION AS ‘SHOCK THERAPY’? The ‘share conversion’ reform discussed in the last chapter represents an important breakthrough in China’s privatization. By issuing bonus shares to individual shareholders, it has diluted state ownership in China’s listed companies; and by making state-owned shares tradable, it has facilitated further sale of state assets in the stock market. In late 2006, Shang Fulin, chairperson of the China Securities Regulatory Commission and a proposer of the share conversion reform, announced that the reform ‘had basically been accomplished’. That is to say, it took only about 20 months (from May 2005 to end of 2006) to complete the whole share conversion reform. The stock market welcomed the change with a 167 per cent rise in total capitalization during this period, and it was widely expected that a ‘golden decade’ for China’s stock market would ensue. As asserted by a Chinese commentator, the share conversion reform was the ‘fastest and smoothest’ change in China’s economic system reforms (NR, 10 January 2007; SZB, 15 January 2007; ZS, 22 January 2007). This dramatic change has led some Chinese scholars to interpret the share conversion reform as ‘shock therapy’. The announcement of the reform on 30 April 2005 (the day before the stock exchanges closed for the weeklong May Day holiday) without any major hints in advance was described as a ‘sudden attack’ of the stock market and ‘an arrow that has no return’ (SZB, 8 May 2006). When the list of...