ChiNext to Activate Third Listing Standard, Opening Door to Unprofitable Innovators

Overview

The 2025 Lujiazui Forum opened in Shanghai on June 18, 2025, with speeches by People's Bank of China Governor Pan Gongsheng, National Financial Regulatory Administration head Li Yunze and China Securities Regulatory Commission (CSRC) Chairman Wu Qing, among others. In his speech, Wu announced that the ChiNext board of the Shenzhen Stock Exchange will formally activate its third listing standard to support high-quality innovative companies that are not yet profitable.

At the same time, the CSRC announced a "1+6" package of measures to further deepen reform of the Shanghai Stock Exchange's STAR Market, and on the same day issued its opinions on setting up a sci-tech growth tier on the STAR Market to make the system more inclusive and adaptable.

Background

ChiNext is the Shenzhen Stock Exchange's market for growth companies. When it moved to a registration-based IPO system in 2020, several listing standards were introduced, including ones without profit requirements. Formally activating the third standard means that innovative companies that have yet to turn a profit will gain a route to listing.

The CSRC has said it will use reforms of the STAR Market and ChiNext as levers to build a more attractive and competitive market system. According to Wu, A-share listed companies invested 1.88 trillion yuan in research and development in 2024, more than half of the national total, and held one-third of the country's patents. Private equity and venture capital funds have invested in 90% of companies listed on the STAR Market and the Beijing Stock Exchange, and in more than half of ChiNext-listed companies. The share of technology companies among A-share firms with a market value above 100 billion yuan has also risen from 12% to 27%.

Key Points

• ChiNext: The third listing standard will be formally activated to support high-quality unprofitable innovative companies.
• Sci-tech growth tier (the "1"): The tier will serve technology companies that have achieved major technical breakthroughs, have broad commercial prospects and invest heavily in research, but are not yet profitable. Their stock names will carry a "U" marker, and investor suitability requirements will be added.
• Six reform measures (the "6"): These include piloting a system of experienced professional institutional investors for companies listed under the fifth standard, piloting an IPO pre-review mechanism for high-quality technology companies, and widening the scope of the fifth standard.
• Wider fifth standard: The standard for unprofitable companies, so far applied mainly in biomedicine, will be extended to frontier fields such as artificial intelligence, commercial aerospace and the low-altitude economy.
• Other measures: Wu also mentioned developing sci-tech bonds and accelerating a sci-tech bond ETF, approving the registration of China's first two data center REITs, expanding the futures and options products available to QFIIs to 100, and simplifying merger and restructuring procedures.
• Post-listing oversight: Wu said that listing is a starting point, not an end point, and that financing is a tool rather than a goal, adding that the CSRC will improve supervision across the full life cycle of listed companies. He also said the China Capital Market Society had been approved for registration in Shanghai.

Implications for Japan–Shenzhen Exchange

ChiNext is one of the core segments of Shenzhen's capital market, and the measure is expected to widen financing options for technology companies, including startups, in Shenzhen and the Greater Bay Area. Wanlian Securities has suggested that, together with China's latest policy direction of allowing Greater Bay Area companies listed in Hong Kong to list on the Shenzhen Stock Exchange, the third standard could help accelerate the growth of technology companies in the region. For Japanese companies, changes in the environment for Shenzhen technology startups may affect the choice of partners and suppliers and opportunities for open innovation, and developments are drawing attention.

Outlook

The reports reviewed do not give the specific numerical requirements of the ChiNext third standard or the timing of the first listings under it. The Shenzhen Stock Exchange's detailed implementation rules and review practice are likely to be the next focus.

From the Association

The Association will continue to follow institutional developments in Shenzhen's capital market and corporate financing environment. We will work to provide opportunities for information sharing and exchange so that Japanese and Shenzhen companies can better understand each other's business environments.