In order to solve problems in the Chinese capital market caused by non-tradable shares since long time ago, the State Council implemented share trading reform in August 2005 formally, aiming at solving China state-owned enterprise reform problems and capital market circulation problems that brought out by non-tradable shares. The implementation of this reform also means simultaneous revision of relevant Chinese company and security laws. Till now, its related effect has been shown in the capital market including A share price turning high, increasing cases of M&A, and more international arbitrage funds pouring into Chinese financial market. Such reforms undertaken because of the unique history and background of the Chinese capital market as well as other market factors was always neglected by Taiwanese researchers when analyzing its development. Ever since the share trading reform being taken in China, the share reform of A share, B share, H share and G share has been done in half year's time and get into the so called full circulation period in China security market history. With the market reform measures promoted by China official in 2005 one after another, the M&A environment has become more and more mature and that brings out international enthusiasm to China M&A market, and it also encourages Chinese businesses to seek capital growth worldwide. Hence, this article will focus on the Chinese financial market reforms by examining its historical background and its legal underpinnings at the same time. In closing, this paper will also look at the general trend in the operations of the Chinese security market.