The Structural Evolution, Institutional Idiosyncrasies, and Global Integration of China's Capital Market (Perspectives in Social Sciences)

Summary

• The paper traces China's capital market from its informal emergence in 1978 to its status as the world's second-largest capital market.p.1
• The STAR Market launched in July 2019 as a pilot for registration-based IPOs, codified nationwide in the revised 2020 Securities Law.p.5
• The Beijing Stock Exchange was established in 2021, and under the old approval system the CSRC capped IPO valuations at a maximum P/E ratio of 23.p.7
• Daily price limits are 10% on the Main Board and 20% on ChiNext and the STAR Market.p.11
• Retail investors make up over 95% of trading accounts and up to 80% of daily trading volume.p.14
• Green finance is aligned with targets to peak carbon emissions before 2030 and reach carbon neutrality by 2060.p.14

Key insights

1. Non-tradable shares represented two thirds of total market capitalization, giving the state absolute voting control.p.4
2. The first domestic corporate bond default occurred in 2014, with Shanghai Chaori Solar, starting to unravel implicit state guarantees.p.9
3. The T+1 rule prevents shares bought on day T from being sold until day T+1.p.11
4. The QFII program launched in 2002 and RQFII in 2011 were the initial channels for foreign capital.p.12
5. Since 2021 capital has been directed to hard tech, semiconductors, green energy and climate finance.p.3
6. Local government financing vehicles are a critical vulnerability in the fixed-income market following the 1994 budget reforms.p.8