Since being introduced in 2005, the reform of non-tradable share system have been conducive to the state-owned assets circulation, value preservation and increment of state-owned assets, and also deepening the reform of the management system of state-owned assets. Thereby this reform program has profound strategic significance under economy development. In this paper, we tried to analyze the defects of non-tradable share reform system and its negative effects on the macro-national economy and Chinese stock market. Considering the social disputes about the stock disturbance, we propose the major cause of current stock market disturbance is the existing problem of the non-tradable shares reform program: “non-tradable shares” holders and fund corporations’ intrinsic motivation in selling non-tradable stock at high price and earning colossal profits. The results of our research indicate that by considering only selling quota of no-tradable share with price to earning ratio (P/E ratio) together, the non-tradable share reform will be energetically and reliably promoted and will be beneficial for China's continuing economic development
