July 23, 2025

Your talking points

China’s domestic IPO market rebounded modestly in the first half of 2025 after bottoming out in 2024, with June seeing an unusual spike in new applications.
Even with signs of recovery, the IPO boom of the past decade is unlikely to return as China’s top financial regulators pivot from scale to long-term value creation.
Chinese regulators are offering preferential IPO policies for the tech sector, especially easing requirements for unprofitable but innovative companies.
Consumer-facing companies are regaining IPO momentum amid China’s structural shift toward domestic consumption.
China remains committed to maintaining ties with overseas capital markets, but geopolitical uncertainties continue to weigh on sentiment, positioning Hong Kong as a preferred IPO destination.

The Brief

China’s IPO market is showing early signs of recovery after a sharp regulatory-driven slowdown in 2024. While listing activity has picked up in 2025, the era of high-volume IPOs is unlikely to return, as financial regulators shift focus from rapid expansion to long-term value creation.

This policy pivot is reshaping market behavior, emphasizing corporate governance, investor protection, and the role of dividends to attract value-driven capital. Tech and consumer-facing firms are regaining momentum under supportive listing pathways, even for pre-profit companies. China is using this easier access to capital to incentivize innovation.

Meanwhile, China continues to back overseas listings amid growing outbound activity by Chinese firms. The Government has stated that it will continue to support Chinese firms benefiting from overseas capital. However, geopolitical uncertainties, particularly U.S. delisting threats, continue to weigh on investor confidence, making the recovery cautious and fragile. Chinese entrepreneurs are also concerned by rumors of Chinese funds being seized in the United States and the ongoing uncertainty about sectors open to Chinese investment, making Hong Kong a preferred IPO destination amid U.S.-China tensions.

Beyond the Points

Domestic IPO market rebounded modestly in the first half of 2025 after bottoming out in 2024, with June seeing an unusual spike in new applications.

Mainland China’s IPO market hit a low in 2024, with only 100 companies going public—down 68% from 2023—and fundraising dropping 81% to RMB 67.4 billion (US$9.2 billion). The downturn was largely driven by regulatory tightening, especially with the CSRC’s August 2023 move to “temporarily tighten the pace of IPOs” in an effort to prevent an excessive number of listings from flooding the market and to support higher valuations for individual stocks during their initial fundraising stages.

After a year-long period of regulatory recalibration, early signs of recovery have emerged in 2025. In the first half, 48 IPOs raised RMB 38 billion (US$5.2 billion), marking a 12% increase in IPO numbers and a 25% rise in proceeds year-over-year. While modest, the surge in June filings suggests a turning point may be underway: 150 new IPO applications were submitted across the Shanghai, Shenzhen, and Beijing exchanges, over 80% of the half-year total and significantly above 2024 levels. If this momentum holds, full-year IPOs could reach 150–180, nearly double last year’s total. However, the rebound remains fragile with IPO volumes still far below pre-2024 levels.

Even with signs of recovery, the IPO boom of the past decade is unlikely to return as China’s top financial regulators pivot from scale to long-term value creation

While China’s IPO market is warming up, the era of 300–500 listings annually—a hallmark of the past decade—is unlikely to return. This is not just because Chinese companies are increasingly looking overseas for financing their global expansion, but more because policymakers are shifting focus from rapid expansion to fostering long-term value creation and enhancing the appeal of China’s domestic capital markets.

For years, economic reforms prioritized growth by accelerating domestic IPO approvals and broadening participation, but this also fueled speculative trading and governance gaps. Unlike mature markets such as the U.S., where institutional investors dominate, over 90% of Chinese investors are individuals, driving nearly 70% of trading and leaving markets prone to volatility and short-termism.

Valuations remain low by global standards: the CSI 300 trades at 13x earnings and the Shanghai Composite at 15x, versus 30x for the S&P 500 and 19x for Japan’s Nikkei 225.

Under CSRC Chairman Wu Qing, regulators are promoting market discipline and long-termism. The 2024 “Nine Measures” policy guidance, which is issued every decade, builds on the 2014 framework and places greater emphasis on strengthening corporate governance, curbing insider trading, tightening domestic IPO approval standards, and pushing listed firms to reward investors—dividends rose to RMB 2.4 trillion (US$329 billion) in 2024. These reforms aim to attract longer-term institutional capital, bringing more stability to the markets and embedding value-oriented investing into China’s capital DNA.

Chinese regulators are offering preferential IPO policies for the tech sector, especially easing requirements for unprofitable but innovative companies.

Amid a sluggish IPO market, China’s tech sector has emerged as a rare bright spot, driven by President Xi Jinping’s push to foster “new productive forces” and strengthen technological self-reliance. Financial regulators are supporting this shift by relaxing listing rules for innovation-driven firms.

In June 2025, CSRC Chairman Wu Qing announced the creation of a “Growth Tier” within the Shanghai Stock Exchange Science and Technology Innovation Board (STAR Market) —China’s Nasdaq-style board for high-growth tech firms—reviving the long-dormant fifth listing standard. Originally designed for early-stage, R&D-heavy companies with strong potential but negative earnings, the standard is now being actively used to support such listings. On July 1, Wuhan Heyuan Biotechnology—despite three years of losses—became the first firm to pass the IPO review under the new framework.

By easing access to capital, China aims to spur innovation and accelerate the commercialization of cutting-edge technologies. This shift has also significantly benefited the Beijing Stock Exchange (BSE), established in 2021 to provide financing platforms for small and medium-sized tech firms. Once viewed with skepticism, the BSE has seen a resurgence this year, receiving 113 IPO applications to date—surpassing the combined total of Shanghai and Shenzhen.

Consumer-facing companies are regaining IPO momentum amid China’s structural shift toward domestic consumption.

In late June, the State Council and six ministries issued guidance calling for greater financial support to boost consumption, explicitly encouraging IPOs and equity financing for high-potential consumer companies across the value chain.

This marks a reversal from earlier informal restrictions, when sectors like food, apparel, and mass-market retail were given “red or yellow light” in IPO vetting. Earlier this year, domestic brands such as Mixue Ice Cream and Hutou Auntie Tea successfully listed in Hong Kong, highlighting renewed investor interest as they seek alternatives to China’s slowing exports and real estate market.

While it remains too early for these supportive policies to fully translate into a wave of consumer IPOs, venture capital funds that had cooled on the sector are cautiously returning, buoyed by clearer exit pathways and improving secondary market valuations.

China remains committed to maintaining ties with overseas capital markets, but geopolitical uncertainties continue to weigh on sentiment, positioning Hong Kong as a preferred IPO destination.

The CSRC has reaffirmed its support for Chinese companies pursuing overseas listings, stressing the importance of maintaining ties with global capital markets amid a wave of Chinese firms expanding internationally. In 2023, it introduced a filing-based registration system for overseas IPOs, enabling swift greenlights if no major issues arise after general reviews. Since then, 122 Chinese firms have been listed in Hong Kong and 72 on the Nasdaq and the NYSE.

Yet Chinese investor sentiment remains cautious. Regulatory uncertainty and geopolitical tensions—particularly U.S. delisting risks for over 300 Chinese ADRs (American Depository Receipts)—continue to weigh on cross-border listings. Chinese entrepreneurs are also wary of rumors about Chinese funds being seized in the U.S. and ongoing ambiguities around sectors open to Chinese investment.

These geopolitical uncertainties have made Hong Kong a key beneficiary, helping it reclaim the top global fundraising spot in H1 2025—driven in part by CATL’s US$5.2 billion IPO to support its global expansion. Hong Kong is likely to continue benefiting from these dynamics, as more Chinese firms opt for listings there over the U.S. Its ability to attract substantial capital—often surpassing mainland exchanges and rivaling major European bourses—reinforces its enduring appeal as a gateway for Chinese companies seeking global investors, especially amid ongoing U.S.-China tensions.

Talking Points | Recovery Yet Cautious: China’s IPO Path in 2025