How does it work?
Beijing has created a number of different stock markets. In order to be listed there, you need special permits. There is a high-tech stock exchange based in Shenzhen, a small and medium-sized enterprise stock exchange in Beijing, and a few others. By listing, Beijing is essentially signaling government support for these companies. This means that investors who invest in the Chinese stock market to get a good return say to themselves: OK, this is not just a company that has to struggle to grow and become competitive. This is a company supported by the state. So there’s a pretty good sense of return on investment. This is not a complete state guarantee like with a state-owned company. But there is an implicit understanding in Chinese investment circles that these companies are a pretty safe bet.
“Neither the USA nor the EU are ready for competition with China”
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