世界银行-中国股票市场的国际化（英）-2023.6-66页_933kb

The Internationalization of China’s Equity Markets

This paper analyzes the effects of China's equity market internationalization, particularly since 2012, on corporate financing and investment activities. The study examines the impact of key policy reforms, including the Qualified Foreign Institutional Investor (QFII) programs, the launch of the Stock Connect mechanism, and the inclusion of China A-shares into the MSCI Emerging Markets Index, on domestic listed firms.

Key Findings:

1. Increased Equity Issuance: Domestic and connected firms significantly increased their equity issuance activities starting from 2014, especially after implementing the Stock Connect program. By 2020, connected firms raised up to 51 percentage points more equity relative to 2012 levels (as a ratio over total assets) compared to unconnected firms.

2. Investment Activities: Connected firms exhibited higher capital expenditures, acquisitions, research and development (R&D) spending, and cash investments compared to unconnected firms. The rise in investment was largely fueled by equity financing from domestic sources during the early stages of internationalization.

3. Role of Domestic Investors: Domestic investors provided "bridge financing" for Chinese firms before international capital inflows became significant. Foreign ownership increased substantially in 2018–2019, coinciding with the MSCI inclusion of A-shares.

4. Event-Specific Effects: The 2014–2016 Stock Connect implementation and 2018–2020 MSCI inclusion had lasting impacts. However, distinguishing the unique effects of each reform is challenging due to their close temporal proximity.

5. Size and Ownership Effects: Smaller and non-state-owned firms showed stronger reactions to internationalization, likely due to their greater reliance on external financing and weaker financial constraints.

6. Aggregate Impact: Internationalization contributed significantly to China's equity financing and investment activities, accounting for approximately a quarter of cash and short-term investments and 24% of R&D spending by domestic listed firms between 2013 and 2020.

Conclusion:
China's equity market internationalization since 2012 has positively influenced corporate financing and investment, with significant aggregate effects. While domestic investors initially drove equity financing, foreign participation surged after international index inclusion. These findings highlight the mixed evidence in the literature on market liberalization effects and suggest that China's unique context, including high domestic savings, may limit the generalizability of results to other emerging economies.