The Financial Stability and Development Commission under the State Council, China's Cabinet, recently held the 36th meeting since its establishment, where it extolled the "zero tolerance" measures for illegal acts and crimes in the country's capital market.

The commission agreed that the integrity of market entities hinges on the long-term healthy development of the capital market, while financial frauds were like a cancer harming the legitimate rights and interests of investors, endangering the market order and restricting its effective functioning, which should be resolutely and decisively corrected before it is too late.

China has grown to be the world's second largest economy, with 129 of the world's top 500 companies in 2019 based in China, surpassing the United States for the first time.

However, the Shanghai Composite Index has remained at around 3,000 points for 20 years. This shows two things－that China's malfunctioning securities market cannot correctly reflect its economy and that Chinese enterprises put more emphasis on scale rather than quality.

In the past, China's securities market lacked a clear market orientation and sound institutions, regulations and rules. As a result, listed companies were seldom severely punished for financial frauds.

However, insider trading and market manipulation will ultimately harm the interests of a majority of small and medium-sized investors. Such a capital market culture, if unchanged, will not only hamper the development of the country's securities market, but also stunt enterprises' motivation to focus on their main business.

Since the country has entered the stage of high-quality development, it must let the market play a decisive role in the allocation of resources and promote fair competition to ensure the survival of the fittest. Without the rule of law, there will be no credit or standardized market order. That is why China must establish a rules-based market order and allow the market to play a decisive role in resources allocation to achieve high-quality development.

Meanwhile, the capital market, which is at the core of the market economy and connects enterprises with investors, can determine capital flows and influence wealth creation and industrial development by encouraging entrepreneurship.

At the meeting, the top regulator stressed the need to deepen reform of the delisting system, further improve delisting standards, simplify delisting procedures and strengthen delisting supervision, to arrive at a market-oriented and normalized delisting mechanism.

Only through institutional opening-up and gradual integration with international rules can China's capital market further open up, attract more foreign investment, which will help exert China's influence as the world's second largest economy.