China To Open New Stock Exchange In Beijing

On 2 September 2021, President Xi Jinping announced its government’s plan to open a new stock exchange in the capital city of Beijing. The new stock exchange, which is the third bourse in China after Shanghai Stock Exchange and Shenzhen Stock Exchange, will be positioned to be the primary platform for innovation driven small and medium enterprises (SMEs). To find out more about Shanghai Stock Exchange and Shenzhen Stock Exchange, you may sign up for economics tuition Singapore with a reputable economics tutor Singapore. Mr Edmund Quek is regarded as the best economics tutor Singapore. His economics tuition Singapore centre is located within five minutes’ walk from the Bishan MRT Station.

Three Pillar Framework

With clearly set out, differentiated focuses, the upcoming Beijing Stock Exchange is poised to further expand the capacity of China’s stock markets and add to their vitality. The new Beijing Stock Exchange, together with the Shanghai Stock Exchange and Shenzhen Stock Exchange will form the “three-pillar framework” to meet the diverse capital needs of various enterprises in China. Under the three-pillar framework, Beijing Stock Exchange will cater to the innovation driven enterprises while the current Shanghai Stock Exchange and Shenzhen Stock Exchange will cater to science and technology driven enterprises and growth enterprises respectively. With guidance from your economics tutor Singapore in your economics tuition Singapore class, discuss the benefits of having a third stock exchange specially catering to innovation driven SMEs. You may also consult your economics tutor Singapore in economics tuition Singapore about the reasons for the differentiated focuses of these three stock exchanges in China.

The plan to open the third stock exchange is part of a series of reforms initiated by the Chinese government to further develop the country’s capital markets. Such a new stock exchange could provide the much-needed financial lifeline for innovation driven SMEs struggling to obtain funding support. In discussion with your economics tutor Singapore in your economics tuition Singapore class, explain the significance of assisting SMEs with their funding needs.

A More Mature Capital Market Structure

With the opening of the new bourse in Beijing, the Chinese government aims to provide a more mature capital market structure to support start-ups and reduce their debt levels. Prior to the existence of digital credit products such as Baitiao, Huabei and Jiebei and after the Chinese government’s crackdown on such products, lending had been and is currently dominated by state-owned banks. To learn more about Baitiao, Huabei and Jiebei, you may refer to other articles published by the same economics tutor Singapore on the website of Economics Cafe Learning Centre, the best economics tuition Singapore centre. This makes it difficult for startups which have no solid track record and limited assets to get loans to fund their aggressive expansion and growth.

The new bourse in Beijing also marks the latest in a slew of initiatives to diversify the country’s capital market. In July 2020, Shanghai’s Science and Technology Innovation Board, or STAR Market was launched. Aiming at providing Chinese science and technology companies with greater access to capital markets, it is touted as the Chinese equivalent of Nasdaq. In consultation with your economics tutor Singapore in economics tuition Singapore, compare the STAR Market with Nasdaq. Since its launch, the STAR Market has hosted the initial public offerings by over 300 companies. In April 2021, Guangzhou Futures Exchange was launched. Guangzhou Futures Exchange, with its focus on environmental products including carbon futures, is the fifth futures exchange in China. The other four future exchanges are Shanghai Futures Exchange, Zhengzhou Commodity Exchange, Dalian Commodity Exchange and China Financial Futures Exchange.

Linda Geng

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