Shanghai Stock Exchange: Steadily advancing the implementation of various reform measures

China Securities Journal Huang Yiling

This year’s government work report includes a series of plans for reform and development of the capital market and serving the real economy with high quality. On March 6, Wu Qing, Chair of the China Securities Regulatory Commission (CSRC), further introduced five key areas for enhancing the high-quality development of the capital market during the 14th Five-Year Plan period.

As an important hub for serving the economy and society, how will the Shanghai Stock Exchange (SSE) effectively fulfill its mission and ensure policies are implemented successfully? In an interview with China Securities Journal, the SSE stated it will unwaveringly follow the decisions and deployments of the Party Central Committee and the State Council, fully implement the CSRC’s work requirements, solidly promote reform measures, adhere to steady progress and reform breakthroughs, and actively pursue a path of financial development with Chinese characteristics. This aims to serve China’s modernization and contribute to building a strong financial nation.

Focusing Resources on the New-Quality Production Capacity Sector

China Securities Journal: The government work report this year emphasizes accelerating the cultivation and expansion of new drivers of growth, developing new-quality production capacity according to local conditions, and building a modern industrial system. What achievements has the SSE made in supporting technological innovation and helping to create a modern industrial system in recent years? What are the considerations for future work?

SSE: In recent years, under the overall guidance of the CSRC, the SSE has accelerated reforms to adapt to innovation-driven development, focusing on better leveraging the functions of the capital market. The goal is to promote the concentration of various factors into the new-quality production capacity sector. Specifically, it has:

1. Promoted increased inclusion of “science” elements in Shanghai-listed companies.
2. Supported mergers and acquisitions to invigorate new industrial drivers.
3. Enhanced the financing functions of science and technology innovation bonds.
4. Improved the richness of indices and ETF products.

Moving forward, under the strong leadership of the CSRC, the SSE will focus on accelerating the development of new-quality production capacity, consolidating and expanding advantages such as large-cap blue chips, leading hard technology, supporting multiple varieties, and providing precise services. It will steadily implement reform measures, deeply integrate technological and industrial innovation, and further enhance the internal stability of the capital market. The goal is to promote a positive interaction between deepening reforms, improving functions, and stabilizing the market, actively serving the nation’s high-level technological independence and the development of new-quality production capacity.

Enhancing Capital Market Resource Allocation Functions

China Securities Journal: Wu Qing clarified in an interview that efforts will be made to synergize the effects of existing policies and incremental reforms. What measures has the SSE introduced in terms of institutional inclusiveness and adaptability? How will it further support the cultivation and development of emerging and future industries?

SSE: The government work report this year explicitly calls for deep integration of technological and industrial innovation. For key core technological enterprises, a normalized “green channel” mechanism for listing, financing, mergers, and acquisitions will be implemented. The SSE will resolutely follow relevant work requirements, increase institutional inclusiveness for breakthrough-driven tech companies, and expand diverse equity financing channels. It will further leverage the resource allocation functions of the capital market to support tech innovation and transformation.

On one hand, it will maintain steady progress while advancing both existing reforms and new policies. In line with the CSRC’s deployment, the SSE will deepen the “Science and Technology Innovation Board (STAR Market) Eight Measures” and the “1+6” reform plan, ensuring they are implemented thoroughly. It will also continuously evaluate and improve relevant rules, reserve policies to support technological innovation and new-quality production capacity, and cautiously expand the scope of the fifth set of listing standards industry-wide. It will focus on cultivating key backup enterprises, improve market service foresight and precision, and host future industry salons to gather strength and explore ways to enhance the capital market’s support for future industries.

On the other hand, it will uphold quality standards, strictly control the entry threshold for issuance and listing. Considering the overall layout of the national strategy for technological self-reliance, it will deepen understanding of “hard technology,” actively utilize the STAR Market to serve new-quality production capacity, and leverage regular cooperation mechanisms with relevant government departments to accurately identify “hard technology” enterprises. It will better coordinate investment and financing, hold intermediaries accountable, and prevent low-quality enterprises with weak innovation capabilities or unclear market prospects from listing. The aim is to ensure that limited listing resources are truly used to support technological innovation, which is also a necessary step to protect investors’ legitimate rights and interests.

Promoting Value Growth and Governance Improvement of Listed Companies

China Securities Journal: What progress has the SSE made in the comprehensive reform of investment and financing, and how will it further strengthen efforts?

SSE: Under the guidance of the CSRC, the SSE has focused on risk prevention, strengthened regulation, and promoted high-quality development. It has accelerated the coordination of investment and financing to improve service quality for the economy and society. Specifically, it has:

1. Actively enhanced direct financing functions.
2. Significantly improved the quality and investment value of listed companies.
3. Accelerated the creation of a “long-term funds and long-term investment” favorable ecosystem.

Next, the SSE will strictly implement the decisions and deployments of the Party Central Committee and the State Council, continue deepening the comprehensive reform of the capital market under the CSRC’s leadership, and further improve the mechanism for long-term funds entering the market. It will:

1. Better utilize equity and debt financing functions, promote reforms, and increase the proportion of direct and equity financing.
2. Expand the scale of industrial bonds and develop innovative products supporting national strategies.
3. Promote value growth and governance improvement of listed companies, continue implementing the “Five Major Regulatory” measures, deepen the “Quality, Efficiency, and Return” action, improve incentive and restraint mechanisms, and guide companies to enhance governance, increase dividends, and buy back shares.
4. Support listed companies in improving core competitiveness through mergers and acquisitions.
5. Further develop the investment side by advocating the “Three Investments” concept, strengthening investor protection, enriching long-term investment products and risk management tools, and continuously expanding the index and product system of the STAR Market to better support long-term investments.

Continuing to Optimize and Prudently Expand Cross-Border Connectivity Mechanisms

China Securities Journal: What new initiatives has the SSE undertaken to deepen two-way opening-up of the capital market?

SSE: In recent years, under the guidance of the CSRC, the SSE has focused on building an open, win-win market ecosystem, making new progress in high-level institutional opening-up, including optimizing connectivity mechanisms and expanding business scope, continuously promoting two-way market openness; enriching cross-border index products and advancing their two-way availability; systematically planning international investor services to enhance service quality; strengthening communication with international organizations, participating actively in global financial governance, and enhancing China’s international image in capital markets.

Next, the SSE will follow the CSRC’s requirements, aiming to improve cross-border investment and financing convenience, further create a more transparent, stable, and predictable market environment. It will continue to optimize and cautiously expand cross-border connectivity mechanisms, enrich cross-border index product offerings, effectively improve services for international investors, strengthen cooperation with countries and regions involved in the Belt and Road Initiative, and tell China’s capital market story well.