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Christopher Balding

Why No One Trusts China's Markets

A crackdown on fraud is underway. But it may not be enough.
Sometimes, they have to go down.

Sometimes, they have to go down.

Photographer: Greg Baker/AFP

When China's top securities regulator said recently that it plans to delist Dandong Xintai Electric Co. for falsifying initial public offering documents, it didn't grab many headlines. But it suggested some far-reaching changes may be afoot.

Xintai is the first company to be expelled from Shenzhen's ChiNext board for such an offense, and one of only a handful that have ever been delisted in China. Its expulsion suggests that regulators are facing up to some unfortunate truths about China's capital markets.