Year-ender: Major financial events in 2021

Editor's note: China has made efforts to build up a multi-level capital market in 2021, with financial sector further liberalized. Market regulation and supervision has been enhanced to crack down on illegal financial speculative activities. At the same time, the country strengthens financial innovation as it faces emerging market demands in digital economy.

The Beijing Stock Exchange starts trading

The Beijing Stock Exchange, China's newly-launched bourse especially serving small- and medium-sized enterprises (SMEs), started trading on Nov 15.

Initially built on the existing National Equities Exchange and Quotations, or the "new third board", BSE is a key step forward in China's efforts to achieve a wholesome multilevel capital market.

As of Dec 3, 82 companies had listed on the new bourse, with total market value of 263.2 billion yuan ($41.1 million).

Shanghai launches data exchange

The Shanghai Data Exchange was established on Nov 25 in the city's Pudong New Area and began trading on the same day.

A total of 20 data products were listed on the exchange on the first day of trading, covering eight industries including finance, transportation and communication.

Located in the core area of Zhangjiang High-Tech Park in Pudong, the SDE was established to address the major difficulties in data trading including identification of data ownership, pricing of data, reaching mutual trust between transaction parties, initiating transactions and overall supervision, said local authorities.

The move represented Shanghai's efforts to promote the circulation of data elements, push forward digital economy development and build Pudong into a socialist modernization pioneer area.

China's first infrastructure REITs began trading

China's first batch of infrastructure real estate investment trusts (REITs) made debut on June 21, with five on the Shanghai Stock Exchange and four on the Shenzhen Stock Exchange.

As a tool that invests in in-use infrastructure projects and distributes project cash flow to investors, the nine publicly offered REITs cover areas including highways, industrial parks, storage and logistics, and sewage treatment.

The price fluctuation limit is 30 percent on the first day of listing and 10 percent after that.

China launches Southbound Bond Connect

China officially launched the Southbound Trading channel of its Bond Connect program on Sept 24, a new program allows bond purchases in Hong Kong's offshore market.

Capital net outflows via the trading scheme are equivalent to as much as 500 billion yuan, with up to 20 billion yuan daily.

The Southbound Connect channels the cross-border capital flows between the mainland and Hong Kong, and is regarded as a significant step for China to further liberalize its capital market, experts said.

The opening of southbound trading also indicates the central government's strong support for Hong Kong's status as an international financial center, Pan Gongsheng, deputy governor of the central bank, said at the opening ceremony.

China continues to crackdown on cryptocurrency speculation

The Chinese government has been maintaining its hard line on virtual currencies this year to crack down on cryptocurrency speculative investment.

The central bank urged financial institutions and payment companies to stop providing services for virtual-currency transactions, and warned investors against engaging in speculative crypto trading.

Virtual-currency speculation disrupts the normal economic and financial order, enhances the risks of illegal and criminal activities such as illegal cross-border asset transfer and money laundering, and seriously infringes on the safety of people's property, the PBOC said in a statement.

To meet the country's low carbon goals, cryptocurrency mining fields, which consumes vast amount of electricity, has been shut down across China, especially those in Sichuan province and Inner Mongolia autonomous region that provides a comparatively low-cost supply of electrical energy for cryptocurrency miners.

China's central bank makes green finance a priority

As China sets its goal to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060, green finance - the economic activities that support environmental protection, save resources and tackle climate change -- has become one of the priorities for the Chinese government during the 14th Five-Year Plan period.

"Green finance" also refers to financial services for project investment, operation and risk management in environmental protection, energy conservation, clean energy, green transportation, green building and other fields, according to the People's Bank of China.

For example, PBOC planned to launch a support toolkit to provide low-cost funds for carbon emission reduction projects, promote information disclosure and commercial credit ratings.

In the first eight months, China's issuance of green bonds jumped by 152 percent from a year ago to exceed 350 billion yuan, already surpassing the figure issued for the whole of last year.

China launches world's largest carbon market

China inaugurated its national carbon market on July 16, with trading center located in Shanghai and carbon quota registration system settled in Wuhan, Hubei province.

It is a landmark practice that helps China accelerate reduction of domestic carbon emissions, and achieve "dual carbon goals" in the long run.

It initially covered more than 2,200 companies in China's power sector. Overall eight high energy-consuming sectors, such as petrochemistry, paper making, non-ferrous metals and civil aviation, will be involved in the trading market by 2022.

The market sets emission permits and quotas for companies to release carbon dioxide. Those do not have sufficient quotas will have to buy them on the market, and those with spare allowances can sell the quotas for profits.

China's carbon market has become the world's biggest trading platform with nearly 4 billion tons of carbon allowances, according to the Ministry of Ecology and Environment.

PBOC expands testing of digital yuan, and Winter Olympics a key field for testing

Central bank's digital currency trial continued to expand its scale in 2021, and Beijing's 2022 Winter Olympics will be the next key field for the testing.

Beijing, Shanghai and Sanya in Hainan province handed out e-CNY envelopes to consumers, and the pilot cities of the digital yuan increased with application scenarios broadened further this year, involving almost all fields of commerce, trade and tourism.

As of Oct 8 this year, the digital RMB pilot application scenarios had exceeded 3.5 million. A total of 123 million personal wallets had been opened, with transaction volume about 56 billion yuan, said PBOC governor Yi Gang.

The 2022 Beijing Winter Olympic Games and Paralympic Games will be held from Feb 4-20, and March 4-13 next year, and some entry-exit points are expected to be ready for extensive use of digital RMB payments during the Games.

Consumers can use digital yuan widely during the Games, not only at the venues but also for various services, including transportation, catering, accommodation, shopping, sightseeing, healthcare, telecommunications, and entertainment.