Promote the optimization and strengthening of listed companies at the national level.

Recently, the State Council issued the “Opinions on Further Enhancing the Quality of Listed Companies,” a major initiative aimed at further strengthening the functional positioning of the capital market, invigorating market entities, increasing support for the real economy, and more vigorously facilitating the establishment of a new development pattern in which the domestic circulation plays the dominant role and the domestic and international circulations reinforce each other.

In the process of forging a new development paradigm that prioritizes domestic circulation while promoting dual circulation, the aggregation and allocation of financial factors play a crucial role. At present, China is accelerating the opening-up of its financial sector to the outside world, striving to swiftly establish a mutually beneficial and win-win relationship with global financial markets—one in which each side is deeply intertwined with the other—thereby strengthening the bonds of shared interests and providing robust support for the new development paradigm.

Amid the ravages of the COVID-19 pandemic and a global economic downturn, China has been the first to emerge from the shadow of the crisis, demonstrating remarkable economic resilience and robust vitality. With its fundamentals continuing to improve, China’s economy has become increasingly attractive to foreign investors. A dynamic, high-return capital market can act like a magnet, firmly drawing both domestic and international capital and strengthening China’s capacity to allocate global financial resources.

In this process, the pivotal role of the capital market will become even more pronounced. The capital market serves as a vital link between the real economy and capital, as well as between issuers and investors, and the quality of listed companies is the cornerstone and bedrock that underpins the capital market. Therefore, enhancing the quality of listed companies is the very source of the capital market’s investment value. This is of paramount importance for strengthening the international influence and attractiveness of China’s capital market, fully leveraging the market’s function of optimizing resource allocation, safeguarding the legitimate rights and interests of investors, and promoting the sustained, stable, and healthy development of China’s capital market.

In recent years, China’s capital market has undergone comprehensive and in-depth reform, with a steadfast commitment to enhancing the quality of listed companies as a fundamental undertaking. As a result, the quality of listed companies has continued to improve, their numbers have grown substantially, and their overall performance has markedly improved. The number of listed companies on the Shanghai and Shenzhen Stock Exchanges has risen from fewer than 1,400 in 2005 to over 4,000 today, further underscoring their role as the “main force” in the national economy and establishing them as pioneers of innovation and leaders in key industries. Currently, foreign financial institutions hold more than 6% of the total market value of tradable A-shares in China, and A-share listed companies have been included in all three major internationally renowned indices: MSCI, FTSE Russell, and S&P Dow Jones.

At present, the quality of listed companies still faces certain challenges and falls short of the requirements for building a modernized economic system. The market has high expectations for policies aimed at enhancing the quality of listed companies and fostering institutional innovation. The “Opinions on Further Enhancing the Quality of Listed Companies” introduces targeted and systematic reform measures to improve the quality of listed companies, with the goal of better leveraging the pivotal role of the capital market and meeting both market demands and societal expectations.

Enhancing the quality of listed companies is a systemic undertaking. To address the salient issues and “pain points” currently facing some listed firms—such as risks associated with stock pledges, misappropriation of funds, and unauthorized guarantees—requires the concerted participation of local governments and multiple regulatory agencies. This entails strengthening consistent oversight both within and outside the exchange, tightening risk constraints, raising the costs of violations and non-compliance, and establishing efficient, flexible mechanisms for inter-agency collaboration and information sharing. In particular, it is essential to draw on the policy measures and practical experience implemented since the onset of the pandemic to support the resumption of business operations and production, thereby improving the mechanisms through which listed companies can respond to major emergencies. By comprehensively leveraging economic, legal, and, where necessary, administrative tools, we can provide robust support for the standardized development of listed companies and help them become better positioned and stronger. In doing so, China’s capital market will become more dynamic and attractive, and investors at home and abroad will derive greater satisfaction from their investments.

We believe that a well-regulated, transparent, and open capital market—characterized by vitality and resilience—will provide strong impetus for accelerating the establishment of a new development paradigm.