SCIO briefing on financial policy package to stabilize the market and expectations

Phoenix TV:

Mr. Pan, at this year's "two sessions" press conference, you mentioned the innovative launch of the science and technology board in the bond market. How is that progressing? You just mentioned the creation of a risk-sharing tool for sci-tech innovation bonds. What are the considerations behind this? Thank you.

Pan Gongsheng:

Building a financial system for scientific and technological innovation is a crucial focus for the high-quality development of financial services to the real economy. It is also a vital part of deepening the structural reforms on the financial supply side. In recent years, the PBC, in collaboration with relevant departments, has comprehensively utilized tools such as credit, bonds, equity and insurance to continuously enhance financial support for technological innovation, accomplishing considerable work and accumulating experience. Just now, Mr. Li and Mr. Wu discussed many aspects related to this.

Earlier, the PBC, together with the CSRC, the NFRA, the Ministry of Science and Technology, and other departments, actively prepared to launch the science and technology board in the bond market to support three types of market entities: financial institutions, sci-tech enterprises and equity investment institutions. At the same time, considering the characteristics of sci-tech enterprises and equity investment institutions, we have improved institutional arrangements for the issuance, trading, information disclosure and credit rating of sci-tech innovation bonds, establishing a supporting rule system that is compatible with the characteristics of technology innovation financing. The relevant policies and preparatory work are basically in place. Currently, the market response has been very positive, with financial institutions, sci-tech enterprises and equity investment institutions of various types actively communicating with the PBC and CSRC, showing strong interest in issuing sci-tech innovation bonds. According to preliminary statistics, nearly 100 market institutions currently plan to issue more than 300 billion yuan in sci-tech innovation bonds, with expectations for even greater participation in the future.

In addition, in order to support equity investment institutions in issuing long-term bonds for financing on the science and technology board, the PBC, in collaboration with the CSRC, has created a sci-tech innovation bond risk-sharing tool, drawing on the experience of establishing the private enterprise bond financing support tool in 2018. As you are all aware, equity investment institutions play a key role in supporting technological innovation, and especially in promoting capital formation. Statistics show that they have supported nearly 90% of the companies listed on the Science and Technology Innovation Board and 60% of the companies listed on the Growth Enterprise Market in China. However, equity investment institutions seldom issue bonds in the bond market, and issuing bonds themselves might involve shorter terms and relatively higher costs.

Drawing from the experience of the 2018 private enterprise bond financing support tool, the PBC provides low-cost relending funds, which can be used to purchase sci-tech innovation bonds. Together with local governments and market-based credit enhancement institutions, various credit enhancement measures have been taken to jointly share the default loss risk of bond investors. This can effectively reduce the bond financing costs for equity investment institutions and support them in issuing longer-term bonds, such as eight- or 10-year bonds.

In the early stages of policy formation, we invited several experts from equity investment and well-known private equity investment institutions to provide their opinions in person. They offered many valuable policy suggestions and expressed high expectations for the introduction of this policy tool.

In short, through specific policy arrangements such as the science and technology board in the bond market and risk-sharing tools, we aim to further broaden the financing channels for sci-tech enterprises and equity investment institutions, stimulate market vitality and confidence, attract more social capital into the field of technological innovation, and promote mutual promotion and a positive cycle between the private equity financing market and the stock issuance trading market. Thank you.

Shou Xiaoli:

Thank you to all the speakers and friends from the media for your participation. Today's briefing is hereby concluded. Goodbye.

Translated and edited by Wang Yiming, Mi Xingang, Liu Sitong, Huang Shan, Wang Xingguang, Zhang Rui, Xiang Bin, Xu Kailin, Zhang Tingting, Chen Xinyan, Yuan Fang, Zhou Jing, Liu Qiang, Li Huiru, Zhang Junmian, David Ball, and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.