Chinese officials have admitted that inexperience hampered their attempts to deal with the turmoil on the country's share markets over recent weeks.

Chinese regulators have told a financial forum in Sydney that China needs to improve its share market regulation after a sell-off that saw around $US4 trillion wiped off the value of Chinese stocks since mid-June.

The comments were made at the first regional conference of the Boao Forum for Asia, a China-based conference set up after the Asian financial crisis, holding its latest meeting in Sydney.

Among the high-profile attendees, former World Trade Organisation head Pascal Lamy addressed the forum on the impact of the global financial crisis.

"We all have to recognise that this big '08 crisis started because of a lack of proper international regulation," he said.

"Since then, I think, some progress has been done. Where improvements should take place, at least if you compare it to the trade side, is in the quality of institutions."

Also on the agenda was integrating Asia's financial systems with the rest of the world.

Reserve Bank governor Glenn Stevens said an opening up of China's financial markets could see $400 billion a year in investment in and out of the country.

"The size of the potential capital flows here may be very large. It's very hard to predict," he said.

"They could end up being something of the order of $US 400 billion a year which is a sizeable proportion actually of global capital flows of a portfolio nature.

"If that happens, and I don't know if it will, but if such flows did happen, it's going to be very important that the depth and the quality of financial markets in Asia, in China and around the rest of Asia, continues to develop.

"That's a big challenge but one worth meeting."

China is considering more financial reforms, such as relaxations on interest rates and fewer restrictions on the flow of money overseas.

However, Chinese regulators at the conference also acknowledged that some investors got caught in the recent share market rout because they did not see the risks of share market investing and more investor education is needed.

One official told the forum that authorities were inexperienced in handling the market volatility.

Zhang Xiaohui, assistant governor of the People's Bank of China (PBoC), China's central bank, argued that the country needs to improve its financial system regulation to prevent risks.

China will be 'shaped by crisis'

But the former head of China's Export-Import Bank, Li Ruogu, thinks too much regulation will hamper business.

"If you limit the development of the business, what is good for the economy?" he asked rhetorically.

"If you make the financial sector less useful, less functional, whether those countries can develop, how can you strike a balance between controlling the risks and to allow the financial sector to play the necessary role for economic development?"

Others are also downplaying the risks.

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Australian regulator Greg Medcraft, the chairman of the Australian Securities and Investments Commission, said the risk of contagion from China's share market turmoil is not impossible, but not that likely.

"Many of those people investing in the market apparently were born after 1980, they've never seen a major collapse before," he said.

"There is a lot of leverage in the market and, frankly, it will evolve. They had a lot of margin lending, they'll probably look at tightening margin lending.

"To me, often we're shaped by crisis. This is what will happen with China and it'll strengthen and become more resilient as a result."

Also playing down the impact of the Chinese share market turmoil on the Chinese economy was Fortescue Metals founder Andrew Forrest, who was at the conference to discuss expanding Australian agriculture into Asia.

"You've got a Chinese population now, a Chinese business population, who really haven't had access to the capital markets and the stock markets and the synthetic markets like the futures and shorting and purchasing and all the carrying on which we in the Western world would have taken for granted," he explained.

"So they've waded into those markets, particularly the synthetic markets, with real gusto. It's [China's main share indices] still up like 85 per cent. That's a fantastic return. So I have to say I'm not worried about it."

Mr Forrest said the recent Chinese share collapse was a necessary correction that has not undermined the fundamental value of assets in that country.

"We have seen the busting of the speculators' bubble, but the real asset values across China have barely taken any notice," he concluded.