CSRC Holds Institutional Roundtable Discussion, Focusing on Investment and Financing Reform and Enhancing Market Stability

How can multi-department collaboration in the market stabilization mechanism enhance market resilience?

As the market fluctuates and the major indices narrowly hold above 4,000 points, investors’ attention to long-term capital entry and the construction of stabilization mechanisms has once again increased.

On March 19, Wu Qing, Chairman of the China Securities Regulatory Commission, held a symposium in Beijing with representatives from the National Social Security Fund, insurance asset management, public funds, private equity funds, and bank wealth management, among others. The discussion focused on how to further deepen reforms on the investment side, improve institutional inclusiveness and adaptability, and strengthen the intrinsic stability of the capital market, gathering suggestions from frontline market institutions.

The day before, on March 18, the People’s Bank of China held an expanded meeting, emphasizing “fully leveraging the macroprudential management and financial stability functions of the central bank, firmly maintaining the stable operation of stock, bond, and foreign exchange markets,” and “studying the establishment of liquidity support mechanisms for non-bank financial institutions under specific scenarios.”

“At the intersection of the conclusion of the 14th Five-Year Plan and the start of the 15th Five-Year Plan, regulatory authorities specifically solicited investment institutions’ suggestions on deepening reforms on the investment side and improving institutional inclusiveness, marking a shift in capital market reform from ‘financing’ to ‘investment’ deepening,” said Cheng Ruizhi, Chief Strategy Analyst at Southwest Securities Research Institute, to Yicai. He noted that the breakthroughs in market stabilization mechanisms, promoting long-term capital entry, and enhancing investor returns discussed at the symposium have laid a solid foundation for further strengthening market resilience during the 15th Five-Year Plan period.

However, some industry insiders remind that the market stabilization mechanism is not about supporting the index to only rise and never fall. The rise and fall of the securities market are normal signals of price discovery, and understanding the stabilization mechanism requires a deeper, longer-term, and more holistic perspective.

Since the National People’s Congress and the Chinese People’s Political Consultative Conference (the “Two Sessions”) this year, policy signals for stabilizing the market and expectations have been continuously released. The government work report emphasizes further improving the mechanism for long-term capital entry. The 15th Five-Year Plan also mentions the need for patient capital and improving policies supporting long-term capital entry.

On March 6, at the fourth session of the 14th National People’s Congress, Wu Qing provided a more detailed explanation of the market stabilization mechanism. “Stability is the overall goal and premise; it is an inevitable requirement for high-quality development of the capital market.” He stated that efforts will continue to be made to leverage the joint efforts of all parties, improve the “long-term investment” market mechanism and ecosystem, enhance the construction of a Chinese-style stabilization mechanism, enrich counter-cyclical and cross-cycle regulation tools and mechanisms, and further strengthen market internal stability.

He also mentioned the need to comprehensively strengthen market risk monitoring, pay close attention to cross-market, cross-period, and cross-border risk transmission, consolidate and enhance strategic reserve forces and stabilization mechanisms, further improve the long-term capital entry mechanism, dynamically refine policies to respond to external input risks, and be prepared to use these tools to maintain market stability.

On March 13, the CSRC reiterated that it will closely monitor changes in international financial markets and the internal and external environment, strengthen the linkage monitoring and regulation of domestic and foreign, futures, spot, and cross-market activities, and continuously consolidate and enhance the Chinese-style market stabilization mechanism. It will also promote listed companies to improve governance and increase value, further strengthening market internal stability.

Institutional investors, as the main force of long-term capital, have become an important part of the market stabilization mechanism. Under strong policy support, the scale of long-term capital entering the market has grown rapidly over the past five years.

Data obtained by the reporter shows that by the end of 2025, there will be 165 public fund managers managing over 37 trillion yuan, with equity funds exceeding 11 trillion yuan, representing increases of 89% and 63% respectively since 2020. By the end of 2025, public funds held over 7 trillion yuan in A-shares with a circulation market value, up 55%.

During the 14th Five-Year Plan, the number of domestically listed ETFs increased from 371 at the end of the 13th Five-Year Plan to 1,381, with assets rising from 1.1 trillion yuan to over 6.02 trillion yuan. Seven broad-based ETFs, including the CSI 300 ETF, have surpassed 100 billion yuan in assets. Regarding pensions, since the full implementation of the individual pension system in December 2024, there are 309 public funds available for personal pension investments. For insurance funds, by the end of last year, the China Banking and Insurance Regulatory Commission approved three pilot programs for long-term stock investments by insurance funds, totaling 222 billion yuan.

Overall, by the end of 2025, the combined holdings of public funds, social security, insurance, and pension funds in A-shares with circulation value will have increased by over 50% compared to the end of the 13th Five-Year Plan.

“The stability mechanism of the capital market is accelerating from ‘single policy response’ to ‘multi-departmental system collaboration’,” Cheng Ruizhi believes. The core of the Chinese-style stabilization mechanism is not simply administrative support but constructing a systematic framework covering tools, cycles, and entities.

In his view, at the tool level, it involves coordinated efforts among monetary policy tools, stabilization funds, regulatory policies, and liquidity support mechanisms; at the cycle level, it combines counter-cyclical and cross-cycle regulation to mitigate short-term shocks and stabilize medium- and long-term expectations; at the entity level, it relies on mechanisms like ‘long-term investment’ and market ecosystem development to enhance endogenous stability and reduce dependence on temporary rescue measures. The recent statements from the central bank further strengthen the monetary and financial support components of the stabilization mechanism.

(From Yicai)