Editor's note: China further deepens its capital market reform this year amid the COVID-19 pandemic, in a move to build up a transparent, efficient and safe operation system with wider international impact.
Thirty-year anniversary of Shanghai and Shenzhen Stock Exchanges
Shanghai and Shenzhen Stock Exchanges both celebrate their 30th anniversary in 2020. [Photo/CFP]
Shanghai Stock Exchange celebrated its 30th anniversary this year. As Chinese mainland's first stock exchange established on Nov 26, 1990, the SSE saw over 1,700 listed companies and 1,831 listed stocks by Dec 22, 2020, generating a combined market capitalization of 43.94 trillion yuan ($6.71 trillion).
According to a market report by Deloitte China, 180 new IPOs made their debuts in Shanghai Stock Exchange and raised 274.75 billion yuan in the first three quarters this year. With a growing number of companies being listed on the main board and Nasdaq-like STAR board, SSE has topped the global stock exchanges in terms of total funds raised.
Starting operations on Dec 1, 1990, the Shenzhen Stock Exchange grew along with the Shenzhen Special Economic Zone, which began embracing reform and opening-up 40 years ago. There were 2,346 companies listed on the SZSE as of Dec 22, with 468 on the main board, 992 on SME board and 886 on technology-focused ChiNext board.
With 114 new initial public offerings raising 80.99 billion yuan from January to September this year, SZSE won fifth place among the world's stock exchanges, Deloitte China said.
Following the United States, China has grown into the second-largest capital market globally after 30 years of development.
Registration-based Reform for ChiNext – China's Nasdaq-style board of growth enterprise
Li Xi (center left), Party secretary of Guangdong province, and Yi Huiman (center right), chairman of the China Securities Regulatory Commission, strike a bell as the first registration-based initial public offerings debut at the Shenzhen Stock Exchange on Aug 24, 2020. [Photo by Shi Li/for China Daily]
China launched its market-based IPO reform on the ChiNext board of the Shenzhen Stock Exchange this year, to better serve growth for innovative firms and give the market a greater say in new share sales.
On June 12, China introduced a series of measures to replace the approval-based IPO system with a registration-based one. Several improvements in the trading rules of ChiNext include stricter requirements for information disclosure at its core, while intensifying responsibilities of issuers and intermediary agencies as well as simplifying delisting procedures, according to the China Securities Regulatory Commission.
Daily price fluctuation limits for all ChiNext shares have been doubled to 20 percent, excluding new listings in five days of debut, and the average time between IPO application and debut has been shortened to at least 71 days.
On Aug 24, the first batch of registration-based IPOs of 18 enterprises made debuts on the ChiNext board.
With easier listing standards and a shorter and more transparent IPO process, the reform facilitates the development of innovative startups and injects new momentum into the Chinese capital market.
People's Bank of China kicks off digital currency pilot program
The booth of the Digital Currency Institute of the People's Bank of China at an expo in Beijing. [Photo provided to CHINA DAILY]
The People's Bank of China has been speeding up the development of digital renminbi this year, as the central bank tested its use and circulation on a large scale in selected regions, including the Beijing-Tianjin-Hebei region, the Yangtze River Delta, the Guangdong-Hong Kong-Macao Greater Bay Area and some eligible locations in mid-western China.
The cities of Shenzhen, Chengdu and Suzhou and Xiong'an New Area in North China's Hebei province, as well as some venues for the 2022 Winter Olympics, will assist in the pilot run, which will, as appropriate, be expanded to other regions of China.
As China's legal tender, the digitalized yuan issued by the PBOC is called the "digital currency and electronic payment", or DC/EP, and aims to replace part of the cash in circulation, the central bank has said.
On Oct 12, Luohu district in Shenzhen, Guangdong province, distributed 10 million yuan in digital RMB to residents. With 50,000 digital "red envelopes", containing 200 yuan each, beneficiaries could spend the money within five days at 3,389 shops in Luohu that have installed the digital currency payment system.
When officially launched, the digital renminbi will have far-reaching influence. It will directly promote the advancement of financial technology, the realization of a cashless society and change the development model of the payment industry, according to an opinion piece from China Daily.
China further opens its capital market, reduces negative listing of foreign investment access
In 2020, China further eases entry thresholds and enlarges business scope for foreign investors to deepen opening-up efforts. [Photo/CFP]
China further eased entry thresholds and enlarged business scope for foreign investors to deepen opening-up efforts this year. Regulators issued policies for allowing foreign capital to fully own futures and life insurance companies, and lifted foreign ownership caps on securities firms and mutual fund enterprises from the beginning of April.
Industry giants BlackRock Financial Management and Neuberger Berman Investment Advisers LLC became the first two foreign financial service providers to apply for mutual fund qualification in China on the first day the new policy took effect.
Credit Suisse Founder Securities Ltd got the China Securities Regulatory Commission's approval for an ownership change on April 19, after which the number of foreign-controlled securities firms in China rose to six.
The CSRC also approved on June 18 the ownership change plan of JP Morgan Futures Company Ltd, making it the first wholly foreign-owned futures company in China.
China sets up SME Development Fund Co Ltd to support firms recovery from pandemic
China SME Development Fund Co Ltd is launched in Shanghai on June 22, 2020. [Photo/Official website of China SME Development Fund Co Ltd]
China SME Development Fund Co Ltd was set up in Shanghai on June 22, with over 10 ministries, State-owned business giants and leading companies in various fields holding stakes.
With total registered capital of 35.75 billion yuan for the company, China's Ministry of Finance for the first time, directly serves as an LP, or limited partner, with a 42.66 percent stake worth 15.25 billion yuan.
The move is intended to ease funding shortages for small and medium-sized enterprises caused by the COVID-19 pandemic, and reboot the confidence of the market and investors.
According to experts and industry insiders, the fund will also promote the sustainable growth of SMEs in key sectors in the long term.
China issues special government bonds for COVID-19 prevention and control
Medical workers from Zhongnan Hospital of Wuhan University pose for a group photo in "Wuhan Living room" makeshift hospital in Wuhan, Hubei province, on March 7, 2020. [Photo/Xinhua]
To prop up the economy hit by the novel coronavirus outbreak, China issued a total of 1 trillion yuan of special government bonds this year for COVID-19 prevention and control.
Proceeds from the bonds funded 24,199 projects, most of which are related to infrastructure construction and the fight against the coronavirus outbreak, Minister of Finance Liu Kun told Xinhua in an interview.
In terms of infrastructure construction, money has been injected into 12 detailed areas, such as food and energy security, industrial chain transformation, ecological environmental management, transportation infrastructure and public health system construction.
To help companies and residents tide over difficulties in pandemic, special funds have been issued in several areas related to people's livelihoods, such as house rent exemptions, low-income groups' living allowances, tax cuts and loan subsidies for key enterprises.
Renminbi-denominated cross-border settlement further expands international partners
Currencies of different countries. [Photo/Sipa]
As China has been making efforts to internationalize the renminbi for more than a decade, the Chinese yuan-denominated cross-border settlement witnessed significant progress this year.
A record 29 countries welcomed RMB as a trade settlement tool by September, including Turkey, Pakistan, Russia, Nigeria and Iran. RMB has grown into an important choice in bilateral transactions with China.
Renminbi-denominated cross-border trade settlement hit 633.8 billion yuan in November, central bank data showed, according to Xinhua News.
The renminbi's growing importance in the international monetary system is an irreversible trend, due largely to China's determination to further open up its financial markets.
With time, a more diversified international monetary system will emerge with the renminbi plays its due role alongside other major currencies, according to an opinion piece in China Daily by Cao Shengxi, a research fellow at the China Institute of Digital Assets.
China issues 4b euro-denominated bonds of negative yield for the first time
China's Ministry of Finance has successfully issued 4 billion euro-denominated sovereign bonds on Nov 18. [Photo/CFP]
On Nov 18, Ministry of Finance has successfully issued 4 billion euro-denominated sovereign bonds with three tranches, comprising five-year bonds, 10-year bonds and 15-year bonds amounting to 750 million euros, 2 billion euros and 1.25 billion euros, respectively, according to the ministry's website.
The five-year tranche achieved a negative yield of -0.152 percent for the first time.
S&P Global Ratings and Fitch ratings both granted the bond an A+ rating, showing China's sovereign bonds are safer and less risky for foreign investors.
The issuance reflects China's determination and confidence to open up at a higher level in an all-round way, and would strengthen the internationalization of Chinese currency.
Bonded copper futures start trading on Shanghai Exchange
The trading of international copper futures is launched on the Shanghai International Energy Exchange on Nov 19 this year. [Photo/CFP]
The trading of international copper futures was launched on the Shanghai International Energy Exchange on Nov 19 this year, on the basis of "international platform, net pricing, bonded delivery and renminbi denomination" with full engagement of overseas traders.
It is another futures product launched in China accessible to foreign investors, following crude oil, iron ore, technically specified rubber 20 and low-sulfur fuel oil futures.
The launching of the futures marks another move in the opening-up of China's futures market, and it will play a positive role in meeting enterprises' demand for risk management, Shanghai Exchange said.
