China policy round-up: all eyes are on China’s private sector, CSRC improves stock suspension rules, State Council promises better business environment

State officials provide strong verbal commitment to private sector development, the China Securities Regulatory Commission promises more stringent stock trading suspension rules, and China’s State Council says it will enhance the domestic business environment for domestic and foreign companies.

  • By Rebecca Feng
  • 09 Nov 2018
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Verbal and policy support for small businesses and private enterprises has dominated state media coverage this week. The Supreme People’s Court (SPC), the top court in China, and the newly established State Administration of Market Regulation (SAMR), vowed to support small and private companies.

The judiciary will strengthen the protection of private property rights, safeguard the legal rights of private entrepreneurs, and create a fair environment, according to local media reports on November 6. The court will also correct past judicial rulings in which private businesses or individual assets may have been wrongfully expropriated.

The head of SAMR, Zhang Mao, outlined plans for supporting private businesses in a November 6 interview with local state-owned People’s Daily.

Zhang promised to build a unified national market and improve competition policies. Specifically, Zhang promised to require all ministries and local governments to review existing policies that hinder fair competition and publish the reviewing results by the end of this year.

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Yi Gang, the governor of People’s Bank of China, reflected on existing policies to support private companies in an interview, according to November 6 local media reports.

Yi admitted that some previous policy measures lacked consideration, coordination and precise execution and have caused unintended consequences that worsened the financing burdens of private companies.

In the future, PBoC will conduct more empirical research, gather feedbacks from private enterprises, and establish pilot schemes before full implementation of future policies.

Yi announced a “three arrow” approach to improve liquidity conditions for the private sector. First, the central bank will promote equity financing for private companies by working with fund managers and brokerages. Second, it will keep talking with financial regulators to promote private firms’ bond issuance. Third, PBoC will research and launch tools to support equity financing by private enterprises.

“It is rare for a senior official to openly acknowledge previous policy missteps,” Yu Song, an analyst at Beijing Gao Hua Securities, wrote in a November 8 note. “We believe this is in response to the recent meetings hosted by President Xi, especially the one with entrepreneurs.”

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China’s Securities Regulatory Commission (CSRC) issued an updated plan to improve the rules regarding trading suspensions on Chinese exchanges on November 6.

The new rules aim to establish basic principles for suspension and resumption of stock trading, reduce the duration of trading suspensions, and strengthen disclosure requirements around why a stock suspends itself from trading, according to the official statement.

Although the document contains no finalised rules, a state-owned news agency called it “the strictest rules for suspending trading” in a November 7 article. 

In a press conference on November 8, a spokesperson from CSRC revealed that until November 5, the two stock exchanges at Shanghai and Shenzhen had 61 listed companies that had suspended trading, 1.7% of all listed companies.

The updated suspension rules follow on from rules implemented after the 2015 stock market crash when more than a quarter of listed companies halted trading.

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China’s State Council rolled out a document to formalise policies and guidance to improve the business environment on November 8. Regulators promised again to ensure foreign businesses will be on equal footing with other domestic enterprises. Before next March, the Ministry of Commerce (MoC) and the National Development and Reform Commission (NDRC) will eliminate all limitations except for the negative list for market entry of foreign investment. It will also introduce measures to investigate regularly whether foreign-owned enterprises are receiving the same treatments in terms of government procurement and financing activities. 

Before the end of this year, MoC will establish complaints-handling agencies for foreign businesses in China’s provinces.

MoC, NDRC, Ministry of Finance (MoF), and State Administration of Taxation, promised to publish concrete state-level regulations on managing foreign businesses by the end of this year.

Further, MoF will work to simplify custom clearance procedures for foreign imports. The goal is to shorten custom processing time by 30% by end-2018 and by 50% as of end-2021.

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Premier Li Keqiang hosted a “1+6” roundtable meeting with the World Bank, International Monetary Fund, International Labor Organization, Financial Stability Board, Organization for Economic Cooperation and Development, and World Trade Organization on November 6.

During the meeting, Li promised that the Chinese government will not solely rely on investment and export. He added that China will keep a proactive monetary policy approach and neutral currency policies.

Li also promised to cut regulatory procedures, taxes, fees, and work harder to help ease private and small businesses’ financing difficulty. Lastly, it will deepen market reform and the opening up of the financial and service industry.

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Liu Liange, president of Bank of China (BOC), commented on the progress of renminbi internationalisation speaking at the China International Import Expo on Tuesday.

“RMB cross-border settlement by Bank of China stood at Rmb4.26tr [$615.4bn] in the first three quarters this year, a year-on-year increase of 60%,” Liu said.

Foreign demand for the renminbi is strong, Liu said. A survey of more than 3,000 global customers of BOC showed that 76% of respondents believed that the use of renminbi in international trade and investment will increase. More than half of financial institutions surveyed said they had strong interests in the Chinese bond market, Liu added.

So far, China has signed bilateral currency swap agreements with over 30 countries and regions and has established 25 overseas banks for renminbi clearing, Liu said.

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In a November 8 speech at the fifth World Internet Conference, held in Wuzhen, Fang Xinhai, vice president of the CSRC, said that in the future the CSRC will focus on making improvements in three areas. 

The first is an effort to improve and clarify the listing procedures for enterprises, the second is to follow up on President Xi’s promise to launch a new tech innovation board in Shanghai, and, finally, the CSRC will keep up the effort of attracting offshore long term assets and institutional investors. He promised to prepare for the upcoming inclusions of more A-shares in the MSCI and FTSE Russell index products.

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Chinese banks have issued more than $200bn of loans for some 2,600 Belt and Road Initiative (BRI) projects, according to a November 6 statement on the BRI official website.

According to the statement, 11 Chinese banks have established 71 first-tier branches in 27 countries along the BRI routes. Meanwhile, 55 banks from 21 BRI countries have set up offices in China.

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China’s State Administration of Foreign Exchange (SAFE) said it had upgraded its statistics of offshore financial assets, adding dividends from holdings of red chip stocks, Bond Connect holdings, investments under the qualified domestic limited partnership and qualified domestic investment enterprise programmes, among other categories. The new measures will also require details on the type of investors using the cross-border channels and the nature of their ownership. The updated data will first be published on May 1, 2019.


  • By Rebecca Feng
  • 09 Nov 2018

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 China Merchants Securities Co 14.82
2 Industrial and Commercial Bank of China (ICBC) 12.96
3 CITIC Securities 9.30
4 Agricultural Bank of China (ABC) 8.10
5 China CITIC Bank Corp 7.20

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 15-Nov-18 Sun Hung Kai Properties Hong Kong 1,200
2 12-Nov-18 Global Logistic Properties via Iowa China Offshore Holdings Hong Kong 1,500
3 12-Nov-18 Shenzhen International Holdings China 4,700
4 24-Oct-18 China Gas Holdings China 2,000
5 15-Oct-18 China Power International Development China 2,000

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 31.88
2 HSBC 19.37
3 Societe Generale 3.97
4 Bank of Taiwan 3.40
4 Cathay United Bank 3.40

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 15-Nov-18 RusHydro Russian Federation 1,500
2 13-Nov-18 Bank of China (Hong Kong) (BOCHK) China 1,000
3 19-Sep-18 Agricultural Development Bank of China (ADBC) China 1,200
4 17-Sep-18 Hitachi Capital (UK) United Kingdom 600
5 13-Sep-18 CIFI Holdings China 1,000