China to Support Listing of High-Quality Non-profit Technology Companies
Published 14 March 2025
Xia Yu
Recently, the China Securities Regulatory Commission (“CSRC”) has repeatedly expressed its support for listing high-quality non-profit technology companies. On 6 March 2025, Wu Qing, Chairman of the CSRC, said at the economic theme press conference of the Third Session of the 14th National People’s Congress (“Press Conference”) that more tolerance and understanding should be given to listing non-profit technology companies. On 11 March 2025, the Party Committee of the CSRC held an enlarged meeting (“Meeting”), pointing out that supporting the listing of high-quality non-profit technology companies will better promote the integrated development of China’s technological innovation and industrial innovation.
On 13 June 2019, at the opening ceremony of the 11th Lujiazui Forum, the CSRC and the Shanghai Municipal People’s Government jointly held the opening ceremony of the Shanghai Stock Exchange STAR Market (“STAR Market”). STAR is taken from one letter of each word in the Sci-Tech innovAtion boaRd. It is China’s first pilot registration-based capital market, with the exchange responsible for reviewing the issuance conditions and the CSRC responsible for the registration procedures. The exchange’s review focuses on the quality of information disclosure and the core technological capabilities of the enterprise rather than short-term financial performance. The STAR Market focuses on supporting the development of innovative companies in the “hard technology” field, including semiconductors, biomedicine, and new energy industries. It allows unprofitable technology companies to list to promote technological innovation and industrial upgrading. It adopts five sets of differentiated listing standards, including market value, revenue, net profit, R&D investment, and cash flow, and explicitly cancels the profit requirements for companies in the traditional A-share market. The fifth set of listing standards allows unprofitable technology companies to list based on “market value + core technology” that is “the estimated market value not less than RMB 4 billion (equivalent to US$ 55 million)” + “the main business or product approved by relevant national departments and having a large market space”. From its establishment in 2019 to May 2024, the STAR Market had brought together 572 listed companies with a total market value of more than RMB 5 trillion (equivalent to US$ 0.69 trillion), cumulative R&D investment of more than RMB 419.9 billion (equivalent to US$ 57.99 billion), and R&D personnel accounting for more than 30%.
On 12 April 2024, the State Council of China issued the Several Opinions on Strengthening Regulation, Preventing Risks, and Promoting the High-Quality Development of the Capital Market (“Opinions”). The Opinions consists of nine parts. They are 1) General requirements; 2) Strictly control the access to issuance and listing; 3) Strict continuous supervision of listed companies; 4) Increase the intensity of delisting supervision; 5) Strengthen the supervision of securities and fund institutions, and promote the industry to return to its roots, become better and stronger; 6) Strengthen transaction supervision and enhance the inherent stability of the capital market; 7) Vigorously promote the entry of medium- and long-term funds into the market and continue to strengthen long-term investment forces; 8) Further comprehensively deepen reform and opening up to better serve high-quality development; and 9) Promote the formation of a joint force to promote high-quality development of the capital market. Part 2 requires further improvement of the issuance and listing system and improvement of the evaluation standards of the scientific and technological innovation attributes of the STAR Market. Part 8 requires continuing to promote the reform of the registration system for stock issuance, enhancing the inclusiveness of new industries, new formats, and new technologies, and promoting the development of new quality productivity.
To implement the requirements of the Opinions, deepen the reform of the registration system, and solve the problems of supporting unprofitable technology companies, on 19 June 2024, the CSRC issued the Eight Measures to Further the Reform of the STAR Market and Serve Scientific and Technological Innovation and the Development of New-quality Productivity (“Eight Measures”), further strengthening the “hard technology” positioning of the STAR Market, enhancing the inclusiveness of new productivity, and promoting the capital market to serve the national science and technology innovation strategy. Given the “hard technology” positioning, the Eight Measures proposes to give priority to supporting “hard technology” companies that have made breakthroughs in key core technologies in new industries, new formats, and new technologies, including core technology companies in the fields of integrated circuits, biomedicine, new energy, etc., to be listed on the STAR Market; further improve the precise identification mechanism of technology companies; and support high-quality unprofitable technology companies to be listed on the STAR Market. Unprofitable technology companies refer to those that suffer losses due to R&D investment, which are essentially different from loss-making companies that are poorly managed and lack competitiveness in the traditional sense. The core of supporting high-quality non-profit companies to be listed is to support the high-quality technology companies with key core technologies, great market potential, and outstanding scientific and technological attributes. Half a year after the implementation of the Eight Measures, the STAR Market accepted IPO applications from four new companies. The unprofitable technology company Xi'an Yicai and the spin-off listed company Huandong Technology were both accepted in November 2024, and 19 new ETFs, such as new energy and artificial intelligence, were added to the STAR Market, with a total scale of over RMB 260 billion (equivalent to US$ 35.91 billion).
In March 2025, the deputy general manager of the Shanghai Stock Exchange (“SSE”) stated at a symposium on financial support for the high-quality development of private companies that the SSE will promote more high-quality private technology companies to be listed on the STAR Market and optimize the relevant financing environment. The SSE will focus on serving the development of new quality productivity and continue to expand the equity financing channels for private companies. Specific measures include improving the valuation inclusiveness of unprofitable technology companies.
Since the beginning of 2025, the listing policy and development prospects of unprofitable technology companies on the STAR Market have been a hot topic. On March 6, the chairman of the CSRC said at the Press Conference that more tolerance should be given to list unprofitable technology companies to support the development of new quality productivity. On 11 March, the Party Committee of the CSRC proposed at the Meeting to enhance the inclusiveness of the system, support the listing of high-quality unprofitable technology companies, steadily restore the application of the fifth set of listing standards for the STAR Market, and launch demonstration cases as soon as possible.
In conclusion, allowing unprofitable technology companies to be listed is one of the core policies of the STAR Market since its establishment in 2019, aiming to support technological innovation and the development of emerging industries. The Eight Measures released in 2024 further improved the precise identification mechanism for technology companies and supported high-quality, unprofitable technology companies to be listed on the STAR Market. The news disclosed in March 2025 indicates that China will introduce more measures to support high-quality, unprofitable technology companies to be listed shortly. In other words, more and more unprofitable technology companies with core technologies and market potential will be listed on the STAR Market.
On 13 June 2019, at the opening ceremony of the 11th Lujiazui Forum, the CSRC and the Shanghai Municipal People’s Government jointly held the opening ceremony of the Shanghai Stock Exchange STAR Market (“STAR Market”). STAR is taken from one letter of each word in the Sci-Tech innovAtion boaRd. It is China’s first pilot registration-based capital market, with the exchange responsible for reviewing the issuance conditions and the CSRC responsible for the registration procedures. The exchange’s review focuses on the quality of information disclosure and the core technological capabilities of the enterprise rather than short-term financial performance. The STAR Market focuses on supporting the development of innovative companies in the “hard technology” field, including semiconductors, biomedicine, and new energy industries. It allows unprofitable technology companies to list to promote technological innovation and industrial upgrading. It adopts five sets of differentiated listing standards, including market value, revenue, net profit, R&D investment, and cash flow, and explicitly cancels the profit requirements for companies in the traditional A-share market. The fifth set of listing standards allows unprofitable technology companies to list based on “market value + core technology” that is “the estimated market value not less than RMB 4 billion (equivalent to US$ 55 million)” + “the main business or product approved by relevant national departments and having a large market space”. From its establishment in 2019 to May 2024, the STAR Market had brought together 572 listed companies with a total market value of more than RMB 5 trillion (equivalent to US$ 0.69 trillion), cumulative R&D investment of more than RMB 419.9 billion (equivalent to US$ 57.99 billion), and R&D personnel accounting for more than 30%.
On 12 April 2024, the State Council of China issued the Several Opinions on Strengthening Regulation, Preventing Risks, and Promoting the High-Quality Development of the Capital Market (“Opinions”). The Opinions consists of nine parts. They are 1) General requirements; 2) Strictly control the access to issuance and listing; 3) Strict continuous supervision of listed companies; 4) Increase the intensity of delisting supervision; 5) Strengthen the supervision of securities and fund institutions, and promote the industry to return to its roots, become better and stronger; 6) Strengthen transaction supervision and enhance the inherent stability of the capital market; 7) Vigorously promote the entry of medium- and long-term funds into the market and continue to strengthen long-term investment forces; 8) Further comprehensively deepen reform and opening up to better serve high-quality development; and 9) Promote the formation of a joint force to promote high-quality development of the capital market. Part 2 requires further improvement of the issuance and listing system and improvement of the evaluation standards of the scientific and technological innovation attributes of the STAR Market. Part 8 requires continuing to promote the reform of the registration system for stock issuance, enhancing the inclusiveness of new industries, new formats, and new technologies, and promoting the development of new quality productivity.
To implement the requirements of the Opinions, deepen the reform of the registration system, and solve the problems of supporting unprofitable technology companies, on 19 June 2024, the CSRC issued the Eight Measures to Further the Reform of the STAR Market and Serve Scientific and Technological Innovation and the Development of New-quality Productivity (“Eight Measures”), further strengthening the “hard technology” positioning of the STAR Market, enhancing the inclusiveness of new productivity, and promoting the capital market to serve the national science and technology innovation strategy. Given the “hard technology” positioning, the Eight Measures proposes to give priority to supporting “hard technology” companies that have made breakthroughs in key core technologies in new industries, new formats, and new technologies, including core technology companies in the fields of integrated circuits, biomedicine, new energy, etc., to be listed on the STAR Market; further improve the precise identification mechanism of technology companies; and support high-quality unprofitable technology companies to be listed on the STAR Market. Unprofitable technology companies refer to those that suffer losses due to R&D investment, which are essentially different from loss-making companies that are poorly managed and lack competitiveness in the traditional sense. The core of supporting high-quality non-profit companies to be listed is to support the high-quality technology companies with key core technologies, great market potential, and outstanding scientific and technological attributes. Half a year after the implementation of the Eight Measures, the STAR Market accepted IPO applications from four new companies. The unprofitable technology company Xi'an Yicai and the spin-off listed company Huandong Technology were both accepted in November 2024, and 19 new ETFs, such as new energy and artificial intelligence, were added to the STAR Market, with a total scale of over RMB 260 billion (equivalent to US$ 35.91 billion).
In March 2025, the deputy general manager of the Shanghai Stock Exchange (“SSE”) stated at a symposium on financial support for the high-quality development of private companies that the SSE will promote more high-quality private technology companies to be listed on the STAR Market and optimize the relevant financing environment. The SSE will focus on serving the development of new quality productivity and continue to expand the equity financing channels for private companies. Specific measures include improving the valuation inclusiveness of unprofitable technology companies.
Since the beginning of 2025, the listing policy and development prospects of unprofitable technology companies on the STAR Market have been a hot topic. On March 6, the chairman of the CSRC said at the Press Conference that more tolerance should be given to list unprofitable technology companies to support the development of new quality productivity. On 11 March, the Party Committee of the CSRC proposed at the Meeting to enhance the inclusiveness of the system, support the listing of high-quality unprofitable technology companies, steadily restore the application of the fifth set of listing standards for the STAR Market, and launch demonstration cases as soon as possible.
In conclusion, allowing unprofitable technology companies to be listed is one of the core policies of the STAR Market since its establishment in 2019, aiming to support technological innovation and the development of emerging industries. The Eight Measures released in 2024 further improved the precise identification mechanism for technology companies and supported high-quality, unprofitable technology companies to be listed on the STAR Market. The news disclosed in March 2025 indicates that China will introduce more measures to support high-quality, unprofitable technology companies to be listed shortly. In other words, more and more unprofitable technology companies with core technologies and market potential will be listed on the STAR Market.