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

21st Century Business Herald:

Mr. Wu, what impact might the additional tariffs have on the production and operations of A-share listed companies? How will the CSRC support listed companies in responding to this situation?

Wu Qing:

Thank you for your questions. Regarding the impact of additional U.S. tariffs, many A-share listed companies have recently provided disclosures through announcements and earnings calls. Overall, the U.S.'s excessive use of tariffs has severely disrupted the global economic and trade order. Listed companies' operations will inevitably face direct or indirect impacts, some larger, some smaller. Companies with a higher proportion of exports to the U.S. will be more significantly affected. General Secretary Xi Jinping has noted that "China's economy is not a pond, but an ocean." A-share listed companies, as representatives of China's outstanding business community, possess strong resilience and adaptability. First, China's massive domestic market and untapped consumer potential are the greatest sources of confidence. Nearly 90% of A-share listed companies' revenue comes from the domestic market. The stable and improving fundamentals of the Chinese economy, with its long-term positive outlook, ensure that listed companies will continue to see steady performance growth. In 2024, three-quarters of listed companies were profitable and half showed profit growth. Notably, as artificial intelligence leads the technology industry wave, related sectors like semiconductors and consumer electronics have seen net profit increases of 13.2% and 12.9% year on year, respectively. Meanwhile, we've seen market-wide dividends and share buybacks reaching historic highs, with the CSI 300 index dividend yield reaching 3.6%. Looking at quarterly reports, listed companies' net profits increased 3.6% year on year in the first quarter of this year. Among them, listed companies in the real economy saw net profits rise 4.3% year on year. Second, significant progress has been made in building diversified export markets. Since the U.S. imposed additional tariffs on China in 2018, A-share listed companies have gradually adjusted and improved their overseas production capacity arrangements. Those with the necessary conditions have been making adjustments and further exploring new markets. Export revenue grew from 4.9 trillion yuan in 2018 to 9.4 trillion yuan in 2024, an increase of 92%, nearly doubling. Meanwhile, direct exports to the U.S. now make up a much smaller portion of total revenue, with 91% of companies reporting that U.S. exports account for less than 10% of their sales. Third, export competitiveness continues to improve. "Made in China" has become deeply integrated into global industrial and supply chains. A-share listed companies possess strong competitive advantages in consistent product quality, economies of scale in production, and technological innovation. Since April 7 — less than a month ago — nearly 350 listed companies have announced share buyback and stake increase plans, reflecting their strong confidence in their own value and development prospects.

Listed companies are an important part of China's economy and the cornerstone of the capital market. Moving forward, the CSRC will continue to promote the functions of the capital market. While strengthening supervision, we will also strive to provide supportive and considerate oversight, doing our best to help affected enterprises cope with the impact of increased U.S. tariffs. First, we will intensify outreach and assistance efforts. From last year to the end of March this year, the CSRC, together with local governments, visited 2,352 listed companies and helped resolve over 3,300 key challenges and difficulties faced by these enterprises. The commission will continue to work with relevant parties to advance this effort. Second, we will optimize regulatory arrangements. For listed companies significantly affected by tariff policies, we will adopt a more flexible regulatory approach regarding equity pledges, refinancing and the use of raised funds, in order to help address their difficulties and provide relief. We will further improve rules regarding exemptions from information disclosure and continue to guide listed companies in strengthening effective communication with investors. Third, we will support transformation and upgrading, especially by encouraging listed companies to achieve this through M&A activity. Since the release of the Opinions on Deepening the Reform of the M&A and Restructuring Market for Listed Companies last year, nearly 1,400 restructuring projects have been disclosed in the Shanghai and Shenzhen stock markets, up 40% year on year. Of these, more than 160 were major asset restructurings, marking a 2.4-fold increase from the previous year. We are currently accelerating the revision of the Administration Measures for Significant Asset Restructuring of Listed Companies and related regulatory guidelines. This includes further improving the supporting measures for the Opinions on Deepening the Reform of the M&A and Restructuring Market for Listed Companies to more strongly support mergers and acquisitions by listed companies. Following industrial logic, we aim to strengthen companies' core capabilities, stimulate vitality, enhance quality—while continuously building greater innovation capacity and risk resilience. Fourth, we will strengthen support by leveraging multi-level capital market products and services. We support listed companies in utilizing various tools such as stocks, bonds and REITs for direct financing. We also encourage eligible domestic enterprises to list overseas in accordance with laws and regulations, enhancing their ability to expand in global markets. Thank you.