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Bloomberg
China is strengthening efforts to encourage direct financing of companies in a financial system that’s long been dominated by banks, as the private sector struggles with access to credit.
Regulators in recent months relaxed rules for companies seeking listings on China’s stock markets, moving towards a registration-based system that in theory automatically green-lights applicants provided they meet set criteria. While regulators still demand case-by-case reviews for bond sales, a legal amendment to be rolled out on March 1 calls for “sharply simplifying†the requirements.
The moves are part of a broader initiative to raise the sophistication of the nation’s capital markets. The campaign includes letting overseas asset managers apply for mutual-fund licenses from April, and new legal guidance on bondholders’ rights. At stake for the private sector is broadening access to credit beyond banks, which tend to favour state-owned enterprises.
The clampdown on leverage has hit private enterprises, which had tapped into China’s swelling wealth management products to fund growth.