File photo shows the exterior view of Shanghai Stock Exchange at Pudong New Area in Shanghai, east China. (Xinhua)
BEIJING, March 31 (Xinhua) -- China Securities Regulatory Commission (CSRC), China's capital market regulator, and stock bourses have recently announced plans to roll out a series of measures to further expand the bond-financing channels for private enterprises, aiming to enhance the development quality and efficiency of China's private economy.
In recent years, China's private firms have shown significant momentum over the past decade amid a favorable policy environment, with number of private firms increasing from 10.86 million entities in 2012 to 44.58 million in 2021, accounting for 92.1 percent of enterprises nationwide.
Insiders believe that China's financial regulators are expected to take more practical and effective measures to support bond financing of private enterprises through concerted efforts, showing the country's strong determination to support development of the private economy.
--Further optimize financing service mechanisms
As stated in this year's government work report, China will improve the system for supporting debt financing by private enterprises, achieve full implementation of the registration-based IPO system, and promote steady and sound development of the capital market.
The China Securities Regulatory Commission (CSRC) intended to launch a total of seven measures to improve bond-financing support mechanisms for private enterprises, including facilitating repurchase financing mechanisms to ease the access threshold to the bond pledge-style repo library for private enterprises under credit protection appropriately, encouraging securities fund institutions to increase business input into private enterprises, and improving the quality of information disclosure, according to China Securities Journal reports.
In addition, Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) will also actively launch a series of measures to strengthen bond-financing support for private firms.
SSE will continue to smooth financing channels for private enterprises by means of diversifying bond products and creating credit protection tools. Efforts will be made to further strengthen the guidance of securities companies, investment institutions, rating agencies and other entities to involve all market entities in building bond financing channels for private enterprises and improve financing and credit enhancement systems of private enterprises.
By the end of 2021, SSE's stock size of private corporate bonds in the whole market was 869.2 billion yuan, of which private corporate bonds accounted for 45 percent.
As for SZSE, it will take multiple measures to improve bond financing support mechanisms for private enterprises, including strengthening business support for private enterprises in terms of financing support tools and pledge-style repo of bonds under credit protection, implementing portfolio credit protection contract and credit enhancement tools, and including more high-quality private enterprises that meet the criteria in the list of well-known and mature issuers.
In recent years, SZSE has successively launched credit protection contracts and credit protection certificates, implementing bond-financing support tools for private enterprises.
At the end of March 2021, it became a pilot unit of pledge-style repo of bonds under credit protection in cooperation with China Securities Depository and Clearing Co., Ltd. (CSDC). Up to now, SZSE has concluded 77 contract transactions and 9 certificate transactions, with a total scale of 4.29 billion yuan, financing about 20 billion yuan from private enterprises.
--Take more effective measures to strengthen bond-financing support
Financing has always been a difficulty faced by the private enterprises in their development history. And one of the solutions from the capital market is to support private enterprises in bond financing.
In the context of the downward pressure on the economy and many difficulties in the development of market entities, insiders expected that a new round of bond-financing support policies for private enterprises are coming soon.
According to Dong Dengxin, head of the Institute of Finance and Securities, Wuhan University of Science and Technology, relevant regulators have been paying attention to bond financing of private enterprises recently. It's expected that there will be more policies launched to help private enterprises to better use the bond market and other direct financing channels by market- and law-based methods.
More inclusive bond financing of private enterprises may provide timely support for more private enterprises with growth space and development potential, and stimulate market vitality and endogenous driving force for development, Dong added.
Currently, it's still necessary to solve the difficulties in bond financing of private enterprises through channel expansion, demand stimulation, and risk prevention, according toa report released by the Research Institute of China Chengxin International Credit Rating CO., ltd. (CCXI).
--Boost development of private economy
Since the reform and opening-up, China's private economy has developed rapidly into an important force that benefits China's economic and social development.
According to this year's government work report, China will uphold and further improve the basic socialist economic system, encourage and guide private enterprises in reform and innovation and foster a cordial and clean relationship between government and business.
At a special meeting recently held by the financial stability and development committee under China's State Council, it was stressed that development is the Party's top priority in governing and rejuvenating the country in the current complicated situations.
Efforts shall be made to take economic construction as the central task, deepen reform, expand opening-up, take market- and law-based methods, support "work unswervingly to both consolidate and develop the public sector and encourage, support, and guide the development of the non-public sector", effectively protect property rights, coordinate epidemic prevention and control with economic and social development, keep economic operation within a reasonable range, and ensure smooth operation of the capital market.
In the future, CSRC and regulator of all levels together with stock bourses will further play the positive role of the capital market in supporting the development of private enterprises. Adhering to the market-based principle, all market participants shall be united to serve bond financing of the private economy, according to industry experts.
(Edited by Gao Jingyan with Xinhua Silk Road, gaojingyan@xinhua.org)
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