China's Dream of Reigning Over Global Capital Markets... Establishment of Beijing Stock Exchange (Comprehensive)

Xi Jinping, "Beijing Stock Exchange Will Become the Hub for Innovative SMEs"
WSJ: Beijing Will Not Stand Shoulder to Shoulder with Hong Kong, Shanghai, and Shenzhen

[Asia Economy Beijing=Special Correspondent Jo Young-shin] A securities exchange will be established in Beijing, the capital of China. It will be the fourth exchange following Hong Kong, Shanghai, and Shenzhen.

Chinese President Xi Jinping announced the establishment of an exchange in Beijing during his congratulatory speech at the opening ceremony of the "China International Fair for Trade in Services (CIFTIS)" held on the night of the 2nd. President Xi said, "The Beijing Exchange will become a base for service innovation-oriented small and medium-sized enterprises."

[Image source=Yonhap News]

The Chinese government has not disclosed a specific schedule for the establishment of the exchange, but considering the US-China conflict situation, it is expected to expedite the launch.

The establishment of the Beijing Exchange appears to be pursued with three main objectives. First, it is part of China's capital market reform and reflects the Chinese leadership's intention to create a China-centered capital market, replacing the US-led capital market, to claim the throne of the global capital market.

It also expresses the will to actively nurture Chinese IT ventures and other technology companies. Since 2013, China has been operating an over-the-counter market called "Xin Sanban (New Third Board)" in Beijing, where small and medium-sized venture companies can raise funds. This market, known as the National Equities Exchange and Quotations (NEEQ), is a place where small and medium-sized venture companies preparing to enter the main market gather investment funds. The establishment of the Beijing Exchange means expanding Xin Sanban to enable small and medium-sized venture companies to attract overseas investment funds more easily and in greater amounts.

Professor Lu Longlu of King's College London Law School said in an interview with the Wall Street Journal (WSJ), "The Chinese government wants to nurture next-generation technology companies," adding, "The Beijing Exchange should be seen as a restructuring of NEEQ, known as Xin Sanban."

In fact, Xinhua News Agency emphasized that the Beijing Exchange is part of Xin Sanban, and China will form a more improved Xin Sanban together with the innovation sector.

Another purpose of establishing the Beijing Exchange includes preventing Chinese technology companies from listing overseas. Didi Chuxing, the Chinese version of Uber, is a representative case. Despite government recommendations to refrain, Didi Chuxing proceeded with its listing in New York and is currently under investigation for national security violations.

The WSJ pointed out that regarding the establishment of the Beijing Exchange, the Chinese leadership is on one hand empowering the capital market while on the other hand "taming" already grown companies.

Alicia Garcia Herrero, a regional economic expert at French financial firm Natixis Hong Kong, said, "All measures announced in China over the past few weeks share the commonality of centralizing power and strong supervisory regulation," adding, "The 'common prosperity' recently mentioned by President Xi means wealth redistribution and is causing concern among Chinese tycoons."

The WSJ, citing experts, reported that expectations for the Beijing Exchange to stand shoulder to shoulder with the Hong Kong, Shanghai, and Shenzhen exchanges are low.

This content was produced with the assistance of AI translation services.