Amid China's critical transition from "Made in China" to "Innovated in China," a cohort of frontier innovation-driven enterprises, spanning from semiconductors to commercial spaceflight, are gaining unprecedented development momentum through the capital market, notes Jianghai Securities. In 2025, Shenzhen DapuStor became the first unprofitable chip enterprise on the ChiNext Board to have its IPO application accepted, while commercial space firms such as Galactic Energy and Space Pioneer have also advanced their A-share IPO processes. "What these enterprises share is high R&D investment and strong growth potential," Jianghai Securities observes. "Though most are not yet profitable, they represent the future direction of China's economic transformation from factor-driven to innovation-driven growth."

A Revolution in Institutional Inclusiveness: The Capital Market Opens its Doors to Innovative Enterprises

In June 2025, the China Securities Regulatory Commission (CSRC) launched the "1+6" reform package for the STAR Market, a key step towards greater institutional inclusiveness. Analysts at Jianghai Securities see this as a pivotal change. The "1" refers to establishing a Sci-Tech Growth Sector and reinstating the fifth set of listing standards for unprofitable enterprises. The "6" encompasses six supporting measures, including attracting professional institutional investors and expanding the fifth set of standards to cover frontier fields like AI, commercial aerospace, and the low-altitude economy. Concurrently, the ChiNext Board began implementing its third set of standards, supporting listings by companies that meet market cap and revenue criteria despite lacking profitability.

This series of institutional innovations, in Jianghai Securities' assessment, marks a departure from the traditional model where profitability was the sole benchmark. It has created a market system better adapted to the growth patterns of sci-tech innovation firms, providing crucial funding during their key development stages. This significantly enhances the intrinsic quality and global appeal of the A-share market, more accurately reflecting the high-quality, innovation-driven nature of China's economy.

Capital Flow Shift: Aggregation from Traditional Industries to Strategic Emerging Sectors

According to Jianghai Securities' analysis, these institutional changes are guiding a profound shift in capital allocation. Data indicates that in 2024, high-tech enterprises accounted for over 90% of new listings on the STAR Market, ChiNext Board, and Beijing Stock Exchange. The market capitalization of listed companies in strategic emerging industries now exceeds 40% of the total market. A number of leading enterprises have emerged in key areas like advanced manufacturing, new energy, next-generation IT, and biopharma, markedly improving the capital market's efficacy in serving technological and industrial innovation.

By the first half of 2024, Jianghai Securities notes that China's capital market had already facilitated the listings of 1,853 companies representative of new quality productive forces, with a total market capitalization of 20.48 trillion yuan. Their share of the total A-share market cap surged from 10.5% in 2018 to 25.3% by that time, indicating they have become a major component of the capital market.

Furthermore, refinancing and M&A activities are increasingly tilting towards the sci-tech sector. The proportion and scale of annual refinancing by these new quality productive forces companies are climbing year-on-year. M&A has become a vital channel for optimizing the allocation of innovation resources. In 2024, there were approximately 3,000 M&A deals market-wide, with emerging industries as the primary focus. About 70% of the targets in deals disclosed on the Shanghai Stock Exchange belonged to sectors like semiconductors and new energy.

Multi-Tiered Market System: Covering the Entire Lifecycle of Innovative Enterprises

China's capital market has developed a multi-tiered system that covers the entire lifecycle of innovative companies, Jianghai Securities observes. The STAR Market maintains its "hard tech" focus, the ChiNext Board serves growth-oriented innovative enterprises, and the Beijing Stock Exchange positions itself as the main platform for innovative SMEs. Each board has a clear, complementary function, providing tailored services for companies at different development stages.

From early-stage incubation by private equity and venture capital funds, to listing and financing channels on the STAR and ChiNext boards, and further to M&A markets facilitating integration and expansion, innovative companies can find appropriate financial support at every growth stage. By the end of Q2 2025, Jianghai Securities highlights that the assets under management of Chinese PE/VC funds reached 14.4 trillion yuan, involved in 150,000 projects. Venture capital funds directed 74%, 50%, and 32% of their investments towards SMEs, high-tech enterprises, and start-up tech firms, respectively, signaling the gradual formation of a patient capital ecosystem focused on "early-stage, small-cap, and technology."

Innovative Capital Support: A Virtuous Cycle from Tech Breakthroughs to Industrial Upgrading

Support from the capital market not only alleviates funding constraints but also, through market mechanisms, promotes R&D and the commercialization of outcomes. In 2024, STAR Market companies invested a total of 168.1 billion yuan in R&D, 2.5 times their net profit, with a year-on-year increase of 6.4%, and added 20,000 new invention patents. This sustained investment lays a solid foundation for innovation.

The effectiveness of this innovation capital is reflected in corporate performance. From 2018 to 2023, Jianghai Securities points out that the compound annual growth rates of revenue and profit for new quality productive forces companies were 11.26% and 9.60% respectively, significantly higher than the overall A-share market average. This demonstrates that capital market support is translating into tangible economic benefits. This ripple effect provides a solid foundation for nurturing new quality productive forces, injecting sustained momentum into China's high-quality economic development.

Alignment with Macro Strategy: Capital Market Reform Resonates with National Development

The capital market's support for innovation is highly aligned with China's macroeconomic transition. According to China's National Bureau of Statistics, the added value of the "Three New" economy (new industries, new business activities and new business models) reached 24.29 trillion yuan in 2024, accounting for 18.01% of GDP and growing at 6.7%, 2.5 percentage points faster than the GDP growth rate.

The Fourth Plenary Session of the 20th Central Committee of the Communist Party of China called for "accelerating high-level self-reliance and strength in science and technology, and leading the development of new quality productive forces," which, in Jianghai Securities' view, provides a historical coordinate for deepening capital market reforms.

As the 15th Five-Year Plan period approaches, China's capital market is accelerating its transformation from a traditional financing platform into an aggregator of innovation factors and a catalyst for industrial upgrade. The CSRC has stated it will continuously improve the convenience of cross-border investment and financing, striving to attract more global capital to invest in China and share its growth. The Chinese capital market is no longer merely a fundraising venue; it has become a hub deeply integrating technological innovation with industrial upgrade, and is emerging as the core stage for cultivating new quality productive forces. The growing attractiveness of the A-share market to global capital allows investors worldwide to participate in and benefit from China's innovation journey.

Company:​ Jianghai Securities Co., Ltd.

Contact Person:​Junwei Liang

Email:​liangjunwei@jhzq.com.cn

Website:​https://www.jhzq.com.cn

Telephone:​16620141985

City:​ Shenzhen, China