Chinese capital market helps achieve common prosperity goal (experts)

The sixth plenary session of the 19th Communist Party of China (CPC) Central Committee, which ended last week, clarified the direction of China’s economic development for the next stage. In terms of implementing quality development, achieving the goal of common prosperity is the key to progress.

China has contributed nearly a third of global wealth gains over the past two decades, according to McKinsey & Co. report China’s wealth has skyrocketed to $ 120 trillion from $ 7 trillion in 2000. How can the Chinese capital market contribute to the distribution of wealth for social equity?

China’s roughly 190 million stock market investors are increasingly trading their investment for “little giants”, innovative small and medium-sized enterprises, and premium brands for businesses.

Two years ago, China stepped up the registration process for corporate public offerings, in line with the country’s common goal of prosperity for the economy.

“In the past, stock prices generally went up and down with changes in indices. But since the registration-based reform, the number of shares has increased significantly. Investment areas have become clearer, such as environmental protection, biotechnology and software information. And the price limits have been relaxed, which is good news for professional investors, ”stock investor Tan Jialong told CGTN.

Tan is now earning up to five percent more in annualized returns on equities than he was earning before the reform, thanks to the growing attractiveness of the variety of companies brought to market by the new system based on the record.

One notable was Zhang Xiaoquan, a Chinese brand known for making scissors and knives. The company has grown from a traditional hardware workshop to a modern enterprise.

Xia Qianliang, Managing Director of Zhang Xiaoquan, said, “We had some problems, including how to open up to international cooperation and how to attract more high-end international professionals. So we decided to enter the capital market, which helped us attract talent and secure trade deals overseas. “

Using the market to expand development opportunities for individuals and businesses is increasingly important in China. Speaking at a press briefing for the sixth plenary session of the 19th CPC Central Committee, Han Wenxiu, Central Committee for Financial and Economic Affairs, stressed the importance of improving balance, coordination and l inclusion of economic development and further reduce the gap between urban and rural areas.

China’s new securities law has created a healthier capital market in the hope of achieving this goal. The law came into effect in March 2020 and changed the requirement for new issuance of shares from “capable of continued profitability” to “capable of continuous operations”.

Orient Securities Chief Economist Shao Yu said capital markets can have bubbles and risks, so it is important to put in place more precise and improved regulations to protect the rights and interests of all investors, including retail investors, business stakeholders and entrepreneurs. He believes this will lead to common prosperity.

Until November 12, the Shanghai STAR Marketplace, the first to adopt the registration-based system, had 354 companies, with a total market value exceeding 5.3 trillion yuan. And China’s newest stock exchange, the Beijing Stock Exchange, debuted with 81 listed companies. Seventeen of them are “little giants”. Over two million investors applied for trading rights on the first trading day, the price of 10 new shares more than doubled.

Society has encouraged innovation and mass entrepreneurship, and this requires more businesses with more growth so that there is more room for development.

Professor John Gong of the University of International Affairs and Economics said, “The equity market is a major vehicle for wealth creation. As the Chinese economy rebounds, the standard of living increases, there must be a wider participation of the domestic market.

The approach of opening the registration for small markets to be listed on the stock exchange not only helps the full participation of people in general, but also benefits small businesses, Gong said.