The remarks were made at a press conference on the sidelines of the 16th World Congress of Accountants, which concluded in Hong Kong yesterday.

Zhou also said China will stick to its plan to launch a NASDAQ-style second stock exchange board.

"(When working on a new policy) we need to study, communicate, reach consensus among various parties and solve detailed problems before the time becomes ripe," Zhou said.

"In the case of QDII, we may still need some time before we move to that stage," he said, adding "it is hard to design any timetable (for the scheme)."

He said the CDR issue is a similar situation.

A QDII arrangement, meant to allow domestic funds to invest in overseas markets within limits, would open up new channels for the Chinese mainland's huge amount of bank savings, while the nascent and highly speculative mainland market still lacks investment tools and quality companies.

The Hong Kong market is expected to be the testing ground for the scheme, which would most likely boost the exchange's liquidity.

The hope for a faster decision-making process on the matter rose earlier this month after the mainland authorities announced they would launch the long-awaited Qualified Foreign Institutional Investor (QFII) scheme next month. The QFII scheme will allow foreign investors to access the huge yuan-denominated A-share market.

The CDR programme would allow overseas-listed firms to float certificates representing their shares on the mainland's stock markets.

Red-chip companies, those with a strong mainland background but registered and listed in Hong Kong, have been seen as the most feasible initial candidates. A number of them have expressed interest in joining the scheme to tap the domestic market.

Mainland investors are officially barred from investing in overseas markets because the yuan remains inconvertible on the capital account.

The mainland market is worried that if the investment ban is lifted, massive amounts of capital will flee overseas.

The authority has said it will eventually make the yuan fully convertible but has been cautious on the issue since the Asian financial crisis.

"We are very prudent in our studies of some policies. This is mainly because of the Asian financial crisis," Zhou said.

For example, he said, the issue of QFII was officially raised in 1998 but became possible only now.

However the CSRC, for its part, has been active in these matters, Zhou said.

Regarding the long-awaited second board, Zhou said: "As far as I know, it is clear that the decision (for the launch) has not changed. It will be launched," he said, adding that it still requires further study by the various parties concerned.

The launch of the second board has been delayed because of the brief history of this type of market, the lack of experience, and especially the bursting of the technology bubble in 2000, Zhou said.

In answer to a question on the initial size of fund for the QFII scheme, Zhou said the market, rather than the regulatory authorities, would determine the size.

"It is most important that we set up a mechanism and see if it will go smoothly and successfully. If it will, we will then make greater strides," he said.

(China Daily November 22, 2002)