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China Opens Third Stock Exchange, Xi Jinping

September 04, 2021

A third stock exchange will be established in China. Following in the footsteps of Shanghai and Shenzhen, which both opened their doors 30 years ago, the capital will also have its own stock exchange. Late yesterday, Chinese President Xi Jinping released a statement during his opening remarks at the China International Fair for Trade in Services. The Chinese leader emphasized that the new exchange will help large and micro hi-tech businesses grow.

The Beijing Stock Exchange will concentrate on the capital’s existing over-the-counter (OTC) market. The value of listed companies in Beijing’s OTC market increased by 56.8 percent last year to 129.5 billion Yuan (US$ 20 billion), well below the 122.8 trillion Yuan (US$ 19.5 trillion) in Shenzhen.

This should be beneficial to small businesses, which have suffered the most as a result of the COVID-19 pandemic. In China, their failure to access loans and funding from domestic financial institutions is a structural issue. As was the case during the worst months of the corona virus emergency, Chinese banks favored large state-owned enterprises.

According to a number of analysts, the Chinese president wants the innovative services sector to give the Chinese economy a new impetus. Recent COVID-19 lockdowns and massive floods in central China have slowed economic growth. Several observers believe that a new stock exchange focused on technology firms will also convince investors, particularly foreigners, who are concerned about certain steps taken by the Chinese government.

President Xi’s latest anti-monopoly campaign targeted the country’s high-tech sector, which costing one trillion. Investors are also concerned about China’s anti-sanctions law, which was enacted in response to harsh actions imposed by the United States and its allies, and which Beijing wishes to broaden to Hong Kong. The recent closure of the US Chamber of Commerce in Chengdu (Sichuan) will not build confidence among foreign investors due to alleged regulatory issues.

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