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Better Serving High-Quality Economic Development While Furthering Reform

By Qiu Ping Source: Updated: 2023-07-13

Change on a scale unseen in a century is unfolding rapidly in the world and is becoming increasingly profound. Meanwhile, China still faces strategic opportunities in its development, and China's capital markets still have bright prospects.

We will ensure capital markets operate smoothly and strengthen market functions. Capital markets are barometers of national economies, as they reflect people's expectations and confidence. During complex and challenging times, it is especially important to maintain the stable and healthy development of capital markets. Since the start of this year, due to overlapping events, including the Ukraine crisis and repeated domestic resurgences of Covid-19, markets have fluctuated considerably. Under the strong leadership of the CPC Central Committee and efforts of relevant parties, however, markets have stabilized gradually and expectations have improved significantly. The CSRC will continue to prioritize the stability of markets, strengthen macro research and planning and work hard to stabilize expectations, listed companies, capital, and market behavior. We will strengthen monitoring and analysis of marginal changes in market capital flows, behavior of investors, and performance of listed companies, enhance endogenous stabilization mechanisms of capital markets, and improve plans for responding to risks in extreme scenarios. We will improve communication and coordination with macroeconomic management departments and competent authorities and ensure policy expectations are stable and consistent. We will help mitigate risks associated with real estate companies, promote the well-regulated and healthy development of the platform economy, and strive to achieve market and economic stability by managing people's expectations.

We will implement the registration-based IPO system across the board to promote optimal allocations of resources. The registration-based IPO system is a key move in comprehensively deepening capital market reform, a key measure for developing direct financing, especially equity financing, and a major reform to improve the systems and mechanisms of the market-based allocation of production factors. The 14th Five-Year Plan, the Central Economic Work Conference in 2021, and this year's Report on the Work of the Government all set out clear plans on the full implementation of the registration-based IPO system. Following nearly three years of pilot programs, a registration-based IPO framework centered on information disclosure has withstood initial market testing, its supporting systems and relevant laws have continuously improved, and the conditions for the complete roll out of the system have largely been fulfilled. In the next stage, the CSRC will set an appropriate course of reform and methodically handle issues such as an evaluation of the registration-based IPO system, positioning of various markets, and the well-regulated and healthy development of capital. We will also lay the groundwork in areas such as regulation, business, and technology to ensure the smooth implementation of this major reform. Furthermore, we will accelerate reform of intermediaries and investment, improve the judicial system and mechanisms of law enforcement regarding securities and the investor protection system, promote key institutional innovations, and create sound institutions and environments for the healthy development of capital markets.

We will enhance the multi-layer system of capital markets to stabilize the macro-economic landscape. We need to focus on stabilizing macro leveraging and increasing micro vitality, expand the coverage and inclusiveness of capital market services, and better meet the diverse development needs of companies in various stages. We will focus on the crux of supporting innovation, develop the STAR Market for "advanced and core technology" companies, and accelerate improvements to evaluation standards for innovation and start-up enterprises on the ChiNext stock market. We will highlight the blue-chip characteristics of the main bourses, strengthen the Beijing Stock Exchange's role with regard to innovative SMEs, and strive to achieve complementary development and moderate competition between capital markets. We will use the leading and supporting roles of the Beijing Stock Exchange to our advantage and coordinate the promotion of the basic and innovation layers of the New Third Board. We will also steadily expand pilots on regional equity markets, enhance market interconnectivity mechanisms at all levels, align basic systems with the features of SMEs, and create major capital markets to serve innovation-oriented SMEs. We must leverage the strategic and fundamental role of private equity and venture capital funds in supporting innovation, improve regulatory transparency and service efficiency, and facilitate fundraising, investment, administration, and delisting. The exchange bond market is a crucial element in the multi-layer system of capital markets. At the end of June 2022, the size of this market in China exceeded 19 trillion yuan, or about 14% of the domestic bond market, with non-financial corporate bonds accounting for 43%. The CSRC will refine debt financing support mechanisms for private companies and focus on making debt financing more widely available and convenient for the private sector and SMEs. We will expand infrastructure real estate investment trusts (REITs) and relevant pilot projects, promote affordable rental housing and pilot projects involving private enterprises, and facilitate the speedy creation of a positive cycle between idle assets and new investment. Together with relevant parties, we will deepen interconnection in bond market infrastructure, make the bond default disposal mechanism more market- and law-based, and accelerate the establishment of a bond market characterized by sound systems and orderly competition as well as transparency and openness. Furthermore, we will refine the system of commodities in the futures market, encourage more businesses in the real economy to participate in the futures market, and strengthen coordinated supervision of futures and spot markets, in order to better ensure supply and stabilize prices.

We will improve the quality of listed companies and better utilize the role of capital markets as a barometer of the national economy. Listed companies are an essential micro-foundation for high-quality development. In recent years, the CSRC has thoroughly implemented the Guidelines of the State Council on Further Improving the Quality of Listed Companies and the Implementation Plan for Refining the Delisting Mechanism for Listed Companies approved by the Central Commission for Further Reform, which have led to a steady improvement in the quality of listed companies. The CSRC will continue to view improving the quality of listed companies as essential for deepening reform of all aspects of capital markets. We will pay equal attention to overseeing entry to market and facilitating removal through a range of channels, uphold the dual market drivers of information disclosure and corporate governance, and tackle further the prominent issues of providing false information and the illegal application of funds and provision of security by major shareholders. We will also encourage listed companies to standardize governance, focus on their core business, and boost their strength and competitiveness. Moreover, we will leverage the leading role of capital markets in mergers and acquisitions, support industry-leading listed companies in driving the coordinated development of SMEs, and promote the integration of industrial and supply chains as well as economic transformation and upgrading.

We will coordinate openness with security considerations and expand high-level and two-way openness. China's capital markets have grown in an environment of opening up, and they will undoubtedly continue to strengthen as we open further. Confronted with the current complex international environment, the CSRC will continue to implement resolutely the decisions and plans of the CPC Central Committee, balance openness with our security considerations, and resolutely promote institutional openness when it comes to markets, organizations, and products. We must accelerate the implementation of a reporting system and ensure smooth channels for overseas listing, support diverse types of companies listing overseas in accordance with laws and regulations, and make effective use of both international and domestic markets and resources. We will continue to strengthen our supervision capacity in an open environment and refine monitoring and supervision mechanisms for cross-border funds and risk response plans. In addition, we will strengthen pragmatic cooperation with capital markets in Hong Kong and the Stock Connect system between the Shanghai, Shenzhen, and Hong Kong bourses. We will encourage the Hong Kong market to list mainland enterprises, support the consolidation of Hong Kong's status as an international financial center, and promote the coordinated development of capital markets in Hong Kong and the mainland.