A new round of capital market reform seeks "quality" in the "new"

Economic Reference Daily Reporter Wu Lihua, Wu Wei, Xiang Jiaying

“Deepen the comprehensive reform of capital market investment and financing,” “Accelerate the development of a well-functioning capital market,” “Improve the coordination of investment and financing functions in the capital market”… From this year’s government work report and plan reports to the draft of the 14th Five-Year Plan, a series of important deployments clearly outline the strategic position of the capital market in China’s high-quality economic development.

By empowering innovation through capital and stimulating vitality through reform, the reform of the capital market is progressing steadily. During the National Two Sessions, many interviewed representatives, committee members, experts, and scholars believed that at the new starting point of the 14th Five-Year Plan, the focus should be on comprehensive reform of investment and financing, continuously improving system inclusiveness and adaptability, so that the capital market can better serve the real economy and cultivate new productive forces.

Capital Market Safeguards: Tech Companies Grow Rapidly

“Eight measures for the STAR Market,” the “1+6” reform plan for the STAR Market, the “Six M&A Measures”… In recent years, the comprehensive reform of investment and financing in the capital market has been steady and effective, significantly enhancing its ability to support technological innovation, paving the way for the growth of tech startups, and allowing more innovative seeds to take root, sprout, and bear fruit in the fertile soil of capital.

The most direct beneficiaries of this transformative power are listed companies that leverage the capital market to achieve leapfrog development.

“Research and development of innovative drugs is a typical high-investment, long-cycle, high-risk industry. Continuous capital support and systematic policy coordination are key for companies to break through technical barriers and achieve commercialization,” said Lu Chunhua, Executive Director of Corporate Communications at Nuocheng Jianhua Pharmaceutical Co., Ltd. (“Nuocheng Jianhua”).

This biopharmaceutical company, focused on new drugs for malignant tumors and autoimmune diseases, was still unprofitable when it listed on the STAR Market in 2022. The funds raised through the listing have become vital for its ongoing R&D investments. Latest data shows that Nuocheng Jianhua expects to achieve revenue of 2.365 billion yuan and net profit attributable to parent of 633 million yuan by 2025, turning profitable for the first time and stepping into a new stage of commercialization and sustainable growth.

“The STAR Market not only provided us with funding support but also witnessed our entire process from R&D breakthroughs to value realization,” Lu said.

Similarly, Ninebot has also grown rapidly under the protection of the capital market. After listing on the STAR Market in 2020, with the support of the capital market, Ninebot achieved leapfrog development, with revenue growing from 6 billion yuan in 2020 to 21.3 billion yuan in 2025, becoming an innovative force in the global short-distance transportation and service robot fields.

“Since listing on the STAR Market, we have deeply felt the comprehensive empowerment of the capital market for technological innovation,” said Xu Peng, Vice President and Secretary of the Board of Ninebot. From R&D investment to market expansion, from technological iteration to brand upgrading, capital support runs through the entire growth process of the company.

Member of the National Committee of the Chinese People’s Political Consultative Conference and Vice President of Southern University of Science and Technology Jin Li believes that through valuation and pricing mechanisms, the capital market can break traditional path dependence, guide social funds to strategic emerging industries and advanced manufacturing, and accelerate the formation of new productive forces. This market-oriented selection mechanism can effectively identify and support industries with technological barriers and growth potential, achieving deep integration of industry chains and capital chains.

Focusing on Cutting-Edge Technology: Increasing Capital Supply

“From China’s actual situation, whether it is cultivating and expanding emerging industries, proactively planning for future industries, or innovating and greening and intelligent transforming traditional industries, further leveraging the functions of the capital market is necessary to accelerate the integration of technological and industrial innovation,” said Wu Qing, Chairperson of the China Securities Regulatory Commission, at the Fourth Session of the 14th National People’s Congress during a press conference on the economy.

The government work report explicitly states the need to strengthen financial services across the entire chain and lifecycle of technological innovation, and to implement a “green channel” mechanism for listing financing and mergers and acquisitions for key core technology enterprises, supporting innovation through financial technology.

National People’s Congress representative and Peking University honorary professor Tian Xuan said that the capital market precisely targets technological frontiers and industrial upgrading needs, optimizing systems for IPOs, refinancing, and mergers and acquisitions, strengthening capital supply in key areas such as hard technology, green low-carbon, and digital economy.

Meanwhile, the unique advantages of the capital market in sharing innovation risks and promoting the formation of innovative capital are increasingly evident. “Looking back at our company’s development, the capital market has provided us with a full-chain relay service from venture capital to IPO financing, allowing us to focus on R&D,” said Shi Jianwei, Secretary of the Board of Beijing Parallel Technology Co., Ltd. The risk-sharing mechanism of the capital market effectively guides social capital to “invest early, small, long-term, and in hard technology,” fully stimulating entrepreneurial spirit and talent-driven innovation.

Shao Zongyou, Secretary of the Party Committee and President of China Science Map Co., Ltd., stated that the STAR Market, through market-oriented and institutionalized approaches, fundamentally solves the core issues faced by tech startups in their early development stages, such as “where does the money come from,” “how to motivate,” and “who bears the risks,” enabling the “spark” of technological innovation to “spread and ignite.”

Inclusive, Precise, and Diverse: Improving Service Quality

The draft of the 14th Five-Year Plan emphasizes the need to deepen the comprehensive reform of investment and financing in the capital market, enhance the system’s inclusiveness and adaptability, and increase the proportion of direct financing.

At this new starting point for reform, how can the capital market further improve the quality and efficiency of services for technological innovation and promote the gathering of factors and resources into new productive forces? Many representatives and committee members offered suggestions:

—— Make listing standards more inclusive. Member of the Chinese People’s Political Consultative Conference and Chairman of Hengyin Financial Technology Co., Ltd. Jiang Haoran proposed further improving diversified listing standards centered on market value, R&D investment, core technology, and market share, making them more aligned with the development laws and industry characteristics of enterprises, so that more innovative companies in growth and R&D stages can access the capital market.

—— Make sector positioning more precise. Tian Xuan said that focusing on the precision of institutional supply, accelerating the construction of differentiated support systems covering the entire enterprise lifecycle, the Beijing Stock Exchange (BSE) should strengthen its role in cultivating “little giants” in specialized and innovative small and medium-sized enterprises; the STAR Market should adhere to its “hard technology” positioning and optimize the application of the fifth set of standards; the Growth Enterprise Market (GEM) should emphasize inclusiveness for “three innovations and four new” enterprises; regional equity markets should deepen the connection mechanisms between specialized and innovative boards and leading enterprises.

Wu Qing revealed that the GEM will add a more precise and inclusive set of listing standards to better support the development of new industries, new formats, and new technologies, actively supporting the issuance and listing of high-quality innovative and entrepreneurial enterprises in new consumption, modern service industries, and other fields.

—— Service models should be more diverse. The draft of the 14th Five-Year Plan states that “forward-looking layout of future industries” places higher demands on the service capacity of the capital market. Yang Chengzhang, Chief Economist of Shenwan Hongyuan Research, said that the capital market should accelerate its transformation from a financing-oriented financial model to a risk service model, establishing a multi-financial institution and technology service intermediary participation risk-sharing mechanism, increasing the supply of technological asset securitization products, and better serving the development of future industries.