Enable private enterprises to access capital market financing more conveniently.

　　The private sector is a vital driving force behind China’s path to modernization and an important foundation for high-quality development. The recently issued “Opinions of the CPC Central Committee and the State Council on Promoting the Development and Growth of the Private Sector” (hereinafter referred to as the “Opinions”) puts forward policy measures such as “supporting eligible private enterprises in accessing equity financing and refinancing,” while explicitly calling for stronger policy support for the private sector and concrete efforts to address its practical challenges.

　　As a key venue for resource allocation, the capital market has long served as an important platform for supporting direct financing by private enterprises. Experts argue that to foster the growth and strengthening of the private sector, it is essential to leverage the capital market’s pivotal role—employing bonds and other financial instruments to meet the diverse financing needs of private firms, encouraging more high-quality private companies to go public, and helping listed private enterprises expand in scale, enhance their quality, and bolster their competitiveness.

　　 Improve the financing risk-sharing mechanism.

　　In recent years, China’s multi-tiered capital market system has continued to improve, laying the groundwork for direct financing by private enterprises at various stages of development and of differing sizes. In particular, with the establishment of the Beijing Stock Exchange and the implementation of the comprehensive registration-based reform, financing channels for private enterprises have become even more accessible.

　　Data show that private enterprises now constitute a significant segment of listed companies: among the more than 5,000 A-share listed firms, roughly 60% are privately owned; private issuers account for nearly half of total proceeds raised by listed companies; and, under the registration-based IPO system, private firms make up over 80% of the approximately 1,000 companies that have gone public.

　　However, for a long time, due to factors such as the relatively weak risk‑resilience of some private enterprises and their lack of collateral, certain financial institutions have shown insufficient willingness to provide financing to the private sector. As a result, the overall accessibility of financing for private enterprises still has considerable room for improvement, and financing costs remain comparatively high. To address this, the “Opinions” propose establishing a market‑based mechanism for sharing financing risks, with the participation of banks, insurers, guarantee institutions, securities firms, and other stakeholders.

　　Dong Zhongyun, Chief Economist at AVIC Securities, stated that this measure is primarily aimed at addressing the difficulties and high costs of financing faced by private enterprises. Given that some private firms are constrained by factors such as asset size, their access to finance remains relatively challenging. Therefore, it is necessary to establish a market‑based, professional risk‑sharing mechanism to lower financing costs and enhance efficiency for private enterprises. By implementing a robust, market‑oriented risk‑sharing framework, all parties involved in the financing process can adopt a shared‑responsibility mindset—reaping benefits together and bearing losses jointly—while clearly defining and reinforcing each stakeholder’s obligations. This approach facilitates risk diversification and collective risk-bearing, helping to alleviate investors’ concerns about financing the private sector, encouraging financial institutions to take a more proactive and enthusiastic stance in supporting private enterprises, and ultimately enabling these firms to secure greater access to capital, improve their financing conditions, and achieve sustained growth and expansion.

　　“The vast majority of private enterprises are small and medium-sized. To protect investors, capital market regulations are numerous and stringent, resulting in relatively high financing barriers for SMEs. Therefore, it is necessary to further optimize the financing mechanisms for private enterprises,” said Tian Lihui, Vice President of Guangxi University and Director of the Institute for Financial Development at Nankai University. He added that establishing a financing risk fund financed by all financial institutions—including securities firms—that participate in supporting the private sector would help mitigate the risk losses previously borne by only a few entities, thereby boosting these institutions’ willingness to support private enterprises. This also marks a significant step forward in China’s efforts to promote the development of direct financing, market‑based financing, and specialized financing for private enterprises.

　　In fact, as the “gatekeepers” of the capital market, securities firms play an indispensable role in facilitating financing for private enterprises. Dong Dengxin, Director of the Institute of Finance and Securities at Wuhan University of Science and Technology, argues that these firms not only provide specialized intermediary services to private companies but also serve as key institutional investors in the securities market, thereby assuming a pivotal function: bridging the gap between issuers and investors, enhancing market efficiency, and ensuring smooth transitions across different stages of development. Mr. Dong emphasizes that, to better address the challenges of difficult and costly financing faced by private enterprises, securities firms can leverage a variety of financial instruments—such as direct investments, distress‑relief funds, and industry‑specific funds—to offer diversified financing solutions tailored to firms at different growth phases. At the same time, they should fully harness their market‑nurturing capabilities, urging listed private companies to strengthen corporate governance, and actively supporting more high‑quality private enterprises in pursuing IPOs, thus serving as effective “value discoverers.”

　　 Enhancing the ease of financing for private enterprises

　　The Opinions propose supporting eligible private small and micro enterprises in raising funds through the bond market, encouraging qualified private enterprises to issue science-and‑technology innovation corporate bonds, and expanding the coverage and enhancing the credit enhancement of the special support program for private enterprise bond financing.

　　The corporate bond market is a crucial channel for private enterprises to access direct financing, helping them optimize their debt structures and broaden their funding sources. In recent years, regulatory authorities have continuously refined the underlying institutional framework, lowering the barriers to bond-market financing for private firms and significantly enhancing their access to capital.

　　“Since the beginning of this year, the Shanghai Stock Exchange has further strengthened its financing services for private enterprises, adopting a multi‑pronged approach that includes providing targeted support to key companies, conducting regular bond roadshows, deepening industry‑specific credit enhancement initiatives, and bolstering market‑making activities in the secondary market, thereby injecting fresh momentum into private corporate bond issuance,” said a responsible official at the SSE. In the first six months of this year, the total volume of bond applications from private enterprises listed on the SSE increased by 109% year over year. High‑quality private firms such as ANTA Sports made their inaugural corporate bond offerings, while leading private groups including Geely Group, Xiaomi Communications, and Sany Leasing successfully issued corporate bonds and public REITs on the exchange, raising capital and setting a positive example.

　　In supporting technological innovation by private enterprises, the issuance of science-and‑technology innovation bonds and notes has provided targeted financing to private firms in the sci‑tech sector. According to data from the National Association of Financial Market Institutional Investors, since the launch of sci‑tech innovation notes in May 2022, a total of 398 such instruments have been issued by 144 companies, raising RMB 341.8 billion. Among them, approximately 20 private enterprises have issued 77 sci‑tech innovation notes, with a combined value of RMB 52.52 billion.

　　“Thanks to the concerted efforts of multiple stakeholders, the bond market has delivered tangible results in supporting private enterprises,” said Dong Zhongyun. However, overall, the share of bond financing raised by private firms remains relatively low. According to available data, as of August 3, the outstanding volume of corporate bonds stood at RMB 10.9 trillion, with bonds issued by private-sector entities accounting for only RMB 309.9 billion—just 2.84% of the total. This underscores that the bond market’s support for private enterprises still has considerable room for improvement.

　　Meanwhile, the cost of bond financing for private enterprises remains relatively high. Dong Zhongyun attributes this primarily to the comparatively lower credit ratings of private issuers. According to statistics, among corporate bonds, only 65% of those issued by private firms carry a rating of AA or above. Lower ratings drive up borrowing costs and may also dampen bond liquidity. Accordingly, going forward, further efforts should be directed toward refining bond-market rating mechanisms and bolstering credit enhancement for private enterprises.

　　In addition, to help more private enterprises leverage the capital markets for growth and expansion, the Opinions explicitly state: “Support eligible private enterprises in accessing equity financing and refinancing.”

　　In this regard, Tian Lihui argues that the capital market should address the issue through three key avenues: clarifying and optimizing regulatory frameworks, strengthening professional services, and bolstering market confidence. First, securities regulation must be further refined to enable private enterprises to clearly determine whether they meet the criteria for, and are well-suited to, going public and raising capital through equity offerings or refinancing. Second,穿透式监管 (penetrative supervision) should be fully implemented to ensure that financing raised by private firms is genuinely channeled into business development, thereby preventing illicit transfers of value such as asset stripping by controlling shareholders. Finally, it is essential to encourage securities firms and other specialized institutions to provide robust, tailored services to private enterprises, leveraging their expertise to enhance corporate governance, offer financing advisory, and ensure compliance with disclosure requirements.

　　 Implement multiple measures to address key shortcomings.

　　In recent years, the capital market has continuously enhanced the precision and directness of its services, injecting more “fresh liquidity” into the private sector. At the same time, the capital market still faces certain shortcomings in supporting private enterprises.

　　“Because some private enterprises are small in scale and have relatively weak financial positions, they often fail to meet the eligibility thresholds for bank loans or for raising capital through equity or bond issuance, thus requiring support from the lower tiers of a multi‑level capital market. However, the bottom tier of this multi‑level market remains underdeveloped, with issues such as insufficient coverage,” said Dong Zhongyun. Furthermore, he noted that financing guarantees are a crucial tool for enhancing the creditworthiness of private enterprises and facilitating their access to finance. Yet at present, certain financing guarantee institutions face limitations due to inadequate capital bases, limited guarantee capacity, and an imperfect risk‑compensation mechanism, all of which constrain industry growth and the effective fulfillment of their functions.

　　In this regard, Dong Zhongyun recommends that, going forward, the capital market should appropriately lower the entry barriers for private enterprises seeking to go public or issue bonds, thereby encouraging them to raise funds directly through the capital markets. At the same time, efforts should be stepped up to strengthen the foundational infrastructure of the capital market and expand inclusive financing services. Furthermore, robust support should be provided to the development of the financing guarantee sector, with incentives and assistance offered to help private enterprises leverage guarantees and other credit-enhancing measures to bolster their financing capacity and fully harness the capital market’s financing functions.

　　“The Opinions send a clear signal to the entire society of the need to foster the growth and strengthening of the private sector, and the capital market should develop an even clearer understanding of the central government’s resolve to support the development of the private economy,” said Tian Lihui. He added that the Opinions should be treated as a guiding framework for work, with efforts focused on boldly promoting innovation within the private sector, tailoring services to its unique characteristics and endowments, and ensuring rigorous implementation of relevant policies and institutional measures.

　　Focusing on the financing needs of private enterprises, the Shanghai and Shenzhen stock exchanges have already introduced a series of innovative measures. For example, the Shenzhen Stock Exchange has been promoting the issuance of various bonds and asset-backed securities by private firms, including vigorously advancing the replicable, large-scale development of intellectual‑property‑based ABS. To date, these initiatives have raised nearly RMB 22.2 billion, achieving full coverage of patents, trademarks, and copyrights, thereby helping to streamline the “financing, trading, and operations” value chain in the intellectual‑property creation process for private technology companies.

　　An official from the Shenzhen Stock Exchange stated that, going forward, the exchange will intensify its efforts to support the private sector by leveraging product and institutional innovations to further strengthen financing mechanisms for private enterprises, enhance the convenience and accessibility of financing for high-quality private firms, and better align with national strategies and the broader goals of economic and social development.

　　Of course, improving the financing challenges faced by private enterprises cannot be achieved overnight; it requires coordinated efforts from multiple stakeholders. For the enterprises themselves, a multi‑pronged approach is essential to enhance their financing capabilities. Dong Zhongyun suggests that, first, “to forge iron, one must first be strong”: private firms should continuously refine their corporate governance structures, bolster their profitability and debt‑servicing capacity, and strengthen their competitive edge. Second, they should proactively deepen their ties with capital markets, intensify business communication with various financial institutions, and gain a thorough understanding of the financial services available in those markets. Third, they should leverage diverse communication channels to raise their profile and improve their image in the capital markets, thereby attracting greater investor attention and support for their development. (Reporter Li Hualin)

[Editor-in-charge: Wu Jingze]

Source: Economic Daily