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Qiu Yong, Party Secretary and Chairman of Shanghai Stock Exchange (SSE)
(December 8, 2022)
Dear Vice Chairman Zhang Yong, Vice Chairman Xu Xianping, Vice Chairman Li Chao, Executive Vice Mayor Wu Qing, Chairman Tian Guoli, Chairman Gou Husheng, Distinguished Leaders and Guests, Ladies and Gentlemen,
Good morning! Our warm welcome goes to all the guests attending the First Yangtze River Delta REITs Forum and China REITs Forum 2022 Annual Meeting. I, hereby, on behalf of the SSE, would like to extend our cordial welcome to all the guests. I wish to express our sincere gratitude to distinguished leaders and friends from all walks of life, who have long been concerned and supported the development of REITs market on SSE.
The Report to the 20th CPC National Congress noted that "to build a modern socialist country in all respects, we must, first and foremost, pursue high-quality development." It also called for "integrating the strategy of expanding domestic demand with deepening supply-side structural reform". Launching the infrastructure REITs pilot would help revitalize the existing assets, boost new investments and domestic demand. It is also an important step for the capital market to deepen the financial supply-side structural reform. Gathering here today to discuss the development of REITs market, we believe that it will help further deepen our consensus, give full play to synergy that comes from support and guidance, and stimulate the long-term and sound development of infrastructure REITs market. I would like to take this opportunity to share with you some of my views.
I. Pushing for infrastructure REITs comes at a better time
As a major country of infrastructure, China possesses distinct advantages of scale. Since the 18th CPC National Congress, China has scored historic achievements in the development of transportation, energy, water conservancy and information infrastructure. Besides, it has topped the world's scale of high-speed rails, expressways, power grids and 4G network for ages. The Report to the 20th CPC National Congress specified that "we will build a modern infrastructure system with a better layout and structure, more effective functions, and greater system integration". It is not only vital for stabilizing investment and expanding domestic demand, but also is strategic for optimizing the economic structure and building a modern industrial system.
Building a modern infrastructure system requires long-term capital support. General Secretary Xi Jinping pointed out that we need to open up the long-term financing channels to accommodate the financing needs of infrastructure construction. Pushing for the sound development of infrastructure REITs was clearly stated in the Outline of the "14th Five-Year Plan". The product functions of REITs products are compatible with the infrastructure sector, which can effectively revitalize the existing assets, promote the market-oriented and standardized development of infrastructure investment and financing to form a virtuous investment cycle. While featuring high liquidity, stable returns and strong security, REITs would help enrich the investment varieties of the capital market and better meet the people's growing demand for wealth management. For the above two reasons, infrastructure REITs products are very popular in all sectors of society since their launch. As of the end of November this year, a total of 15 REIT projects have been issued on the SSE, with funds raised at 54.1 billion yuan and a total market value of listed REITs at 57.2 billion yuan. It has played a demonstration role in revitalizing existing assets, promoting a virtuous investment cycle and increasing the proportion of direct financing.
II. Building a high-quality Chinese REITs market is the mission of the SSE
Over recent years, the SSE has made the building of a high-quality Chinese REITs market a crucial strategic mission. Under the leadership of China Securities Regulatory Commission (CSRC) and the guidance of the National Development and Reform Commission, with the strong support of all parties concerned, the SSE has earnestly fulfilled its duties and mission, achieved positive results by steadily promoting the pilots of publicly offered infrastructure REITs through closely combining the national strategy with "Chinese characteristics" and high-quality development.
First, closely following major national strategies. Centering on key sectors, regions and enterprises, SSE has actively explored effective ways for REITs to serve the national strategies and given full play to the important role of REITs in supporting innovation-driven development, coordinated regional development and state-owned enterprise reform. With increasingly various REITs products, the underlying assets have covered expressways, science and technology industrial parks, sewage treatment, modern warehousing and logistics, clean energy, government-subsidized rental housing, etc. Raised funds are mainly invested in fields to strengthen points of weakness, including scientific and technological innovation, green development and people's livelihood, etc. We have also advanced the establishment of the Yangtze River Delta Infrastructure REITs Industry Alliance to step up efforts to support infrastructure development in the Yangtze River Delta. Going forward, we will steadily expand the scope of the pilot project and strengthen support for projects to ensure the stability of industrial and supply chains and people's livelihood, thus contributing to the stable and high-quality development of the macroeconomy.
Second, focusing on "Chinese characteristics". Building Chinese REITs market will serve as an important part of developing modern capital market with Chinese characteristics. As imported goods, REITs must be localized with China's national realities. By fully obeying the general law of REITs market, drawing upon the global best practices and relying on our national conditions, we have made a series of institutional arrangements with Chinese characteristics in practice. In many aspects, such as the selection of underlying assets, product structure, return structure and examination, reflect distinct Chinese characteristics and characteristics of development stage. Next, based on national conditions and realities, we will promote the stable and long-term development of the REITs market with Chinese characteristics by upholding fundamental principles and breaking new ground step by step.
Third, focusing on high-quality development. Since the pilot of publicly offered infrastructure REITs, the SSE has earnestly implemented the philosophy of registration scheme reform, continuously improved the operation mechanism and regulatory system of REITs market, and actively attracted the participation of high-quality projects in the pilot. As the scale and scope of REITs market steadily expanded and the types of pilot assets continuously enriched, the market has been running smoothly on the whole. Over this year, we have revised and issued rules for additional offering to promote a sound development pattern driven by both "new product launches" and "expansion of funds" and issued Guidelines of Rules for REITs - Government-subsidized Rental Housing. Besides, a breakthrough has been achieved in the publicly-offered infrastructure REITs of private enterprises. Up to now, the liquidity and price discovery mechanism on the secondary market post sound operation. Generally speaking, the pilot results are in line with expectations. Next, we will continue our efforts in the market organization cultivation, system arrangements, underlying assets expansion, regular project issuance and investor publicity and education to promote the high-quality development of the REITs market.
III. Working together to promote the high-quality development of infrastructure REITs market with synergy
The development of infrastructure REITs depends on strong support and joint efforts of all parties. Since the pilot, SSE has taken the initiative to strengthen reporting and communication on new situations and problems in practice, and received timely guidance and strong support from all parties. During the course of the pilot projects, departments and local governments have given full play to their respective strengths and introduced a series of supporting policies with important guiding significance. They have also continually promoted the improvement of the supporting rules and systems, the listing of high-quality projects and the sense of gain for investors to preliminarily form the sound ecology for jointly promoting the development of infrastructure REITs. In the next step, under the leadership of the CSRC, SSE will constantly review the pilot experiences and build together extensive consensus through positive reports and communication to jointly promote the stable and healthy development of the REITs pilot.
Distinguished Leaders and Guests,
The infrastructure REITs pilot project is showing a promising future along its journey. In the new era of accelerating the construction of a new development paradigm and focusing on promoting high-quality development, SSE will always be guided by the spirit of the 20th CPC National Congress, implement the requirements of Chinese modernization, work together with all parties to create a better future, and actively contribute to the construction of high-quality Chinese REITs market to better serve the overall situation of national reform and development.
I wish this Forum and Annual Meeting a great success!
