In a bid to expand the opening-up of financial markets, China will launch a key standardized interest rate swap contract under the Swap Connect, and continue to waive clearing fees, as the program approaches its first anniversary.

Experts said the new measures will be in line with global market practices and further attract overseas investor participation in China's bond and derivatives markets.

The Swap Connect, which commenced exactly a year back, is a connection mechanism between the Chinese mainland and Hong Kong that facilitates offshore investors executing interest rate derivatives transactions with investors in the mainland.

The country's central bank, the People's Bank of China, said on Monday that the Swap Connect will incorporate interest rate swap contracts with payment cycles based on the International Monetary Market or IMM dates, which are highly standardized and aligned with the mainstream trading contracts in global markets.

The move, experts said, responds to investor demand for more standardized products under the Swap Connect to optimize their global risk management.

The connection program will also launch contract compression services, which allow investors to compress eligible interest rate swap contracts with opposite buy and sell directions, thus helping reduce capital costs for trading, the PBOC said.

Also, the fee discount policy for the Swap Connect will be extended for another year, with the transaction and clearing fees via the Swap Connect fully waived.

The package of measures would further meet investors' diversified risk management needs and effectively reduce the cost of taking part in the Swap Connect, thus helping attract more foreign institutional investors to the Chinese bond market and advance the internationalization of the renminbi, the PBOC said.

Tan Yueheng, chairman and executive director of investment bank BOCOM International Holdings Co Ltd, said the enhancement measures are in line with international investors' trading practices, indicating that the renminbi interest rate swap market will further integrate with the global markets.

Xu Zhaoting, head of Investment Bank China, Deutsche Bank, which is a dealer of the Swap Connect, said that international investors are positive about the launch of interest rate swap contracts that have payment cycles based on IMM dates, which will further assist with their risk management, while the contract compression services will help them reduce costs.

Li Bing, head of Asia-Pacific at Bloomberg, which provides trading services for the connection program, said the Swap Connect has increasingly emerged as a popular channel for foreign institutional investors to hedge the interest rate risks associated with their rising investments in the onshore bond market.

Official data showed that, as of the end of April, 58 overseas institutional investors from more than 10 countries and regions have conducted more than 3,600 interest rate swap transactions via the Swap Connect, with a total principal amount of nearly 1.77 trillion yuan ($244.64 billion).

"With the enhancement of Swap Connect, trading activity is expected to further increase," Li said.

The optimization of the Swap Connect came after the China Securities Regulatory Commission released a series of measures to expand the mutual access between the capital markets of the Chinese mainland and Hong Kong, demonstrating the country's continuous efforts in financial opening-up.

Oswald Chan in Hong Kong contributed to this story.

As of April 30, 2024, all companies on the Shanghai Stock Exchange (SSE) main board have completed the disclosure of their 2023 annual reports. Supported by the strong rebound and improvement in overall economic performance, the operating performance of the companies on the SSE main board remained stable in 2023 according to the reports. Profitability continued to improve, and with adaptive development strategies, solid progress was made in cultivating new quality productive forces.

I. Overall Operating Performance Remained Stable, with Enhanced Endogenous Stability

In 2023, the companies on the SSE main board realized total operating revenue of RMB 50.45 trillion, up by 0.7% year on year; Net profit reached RMB 4.22 trillion, a slight decrease of 1.2% compared to the previous year; and a net profit after deducting non-recurring gains and losses at RMB 4.03 trillion, up by 0.8% year on year. Overall, operating performance remained largely unchanged from the previous year. 1,422 companies realized profits, accounting for over 80% of the total. Among them, 740 companies experienced growth in performance, with 166 companies seeing net profit increases exceeding 50%. On the other hand, the overall loss saw a significant reduction, with the amount of losses decreasing by nearly 50% year on year. A total of 222 companies managed to reduce losses or turn losses into profits.

Taking a longer-term perspective from 2018 to 2023, the endogenous stability of production and operation of the companies on the SSE main board continued to strengthen. The compound annual growth rates of operating revenue and net profit over these five years were 7% and 6%, respectively. The median operating revenue increased from RMB 2.335 billion to RMB 3.536 billion, while the median net profit rose from RMB 167 million to RMB 189 million.

The performance of listed companies in the real economy sector proved more robust, with total annual operating revenue reaching RMB 41.88 trillion, net profit at RMB 1.94 trillion, and net profit after deducting non-recurring gains and losses at RMB 1.77 trillion. These figures represent year-on-year changes of 0.9%, -0.7%, and 1.3%, respectively, outperforming the overall performance of the SSE. In terms of liquidity, there was a net cash inflow from operating activities of RMB 4.12 trillion for the whole year, representing a year-on-year growth of approximately 4.5%, covering the profit scale by 2.1 times. The asset-liability ratio at the end of the year stood at 59.36%, down 0.22 percentage points from the beginning of the year, indicating a stable decrease in leverage.

II. Traditional and Emerging Industries Realized Mutual Promotion and Integration, Fostering a Positive Momentum in the Development of New Quality Productive Forces

While consolidating the economic "bedrock", the companies on the SSE main board persistently prioritized the development of new quality productive forces tailored to local conditions as a key focal point for achieving high-quality development. Data indicates that in 2023, the total R&D expenditures of the companies reached nearly RMB 900 billion, marking a year-on-year increase of 5% and maintaining a growth trend for three consecutive years. Among them, 138 companies invested over RMB 1 billion in R&D, with 19 companies surpassing RMB 10 billion in R&D investment. Additionally, 108 companies exhibited an R&D intensity exceeding 10%. Industries such as aviation equipment, electric power, and telecommunications services experienced R&D expenditure growth rates exceeding 30%, while sectors like software development and medicinal chemistry demonstrated R&D intensities exceeding 10%. High investment in R&D drove simultaneous progress in the development of emerging industries and the transformation of traditional industries, fostering mutual promotion and integration. This acceleration nurtured new quality productive forces and supported future industrial layouts.

Emerging sectors began to thrive. Over the past decade, there has been a significant leap in the number of emerging manufacturing and modern service companies listed on the SSE main board. The number of listed companies in the machinery equipment industry increased from 45 to 125; in the pharmaceutical and biotechnology industry, it increased from 62 to 109; in the automotive industry, it increased from 42 to 114; in the power equipment industry, it increased from 45 to 87; in the electronics industry, it increased from 26 to 71; and in the communication industry, it increased from 14 to 29. Companies in related industries have seen significant increases in revenue, profit, and market value shares compared to companies in the real economy listed on the SSE main board, with respective jumps of 5, 10, and 10 percentage points. Key industrial chains are rapidly converging, evolving from inception to fruition, expanding from isolated points to comprehensive networks, thereby providing new engines for economic development. In the solar photovoltaic industry, listed companies include the world's largest monocrystalline silicon manufacturer, LONGi Green Energy Technology Co., Ltd., the leading integrated silicon material and solar cells manufacturer, Tongwei Co., Ltd., and top players in photovoltaic module materials like Hangzhou First Applied Material Co., Ltd. and Flat Glass Group Co., Ltd. In the integrated circuit industry, leading companies include Will Semiconductor Co., Ltd. Shanghai in the field of analog chip design, and GigaDevice Semiconductor (Beijing) Inc. In the field of storage chips. JCET Group Co., Ltd. holds a top-three global market share in the packaging and testing sector, while Hangzhou Silan Microelectronics Co., Ltd is a leading domestic equipment manufacturer. In the automotive industry, leading passenger and commercial vehicle manufacturers like Guangzhou Automobile Group Co., Ltd., Great Wall Motor Company Limited, and Yutong Bus Co., Ltd. are prominent. It also hosts 86 component companies spanning various automotive subfields, including Fuyao Glass Industry Group Co., Ltd., Ningbo Tuopu Group Co., Ltd., Bethel Automotive Safety Systems Co., Ltd., and Ningbo Joyson Electronic Corp.

Traditional industries underwent an accelerated transformation, companies of which actively leveraged new technologies to implement upgrades and enhancements, transitioning towards "new" development. Over the past three years, the compound annual growth rates of R&D investment in the transportation, steel, and utilities industries were 20%, 13%, and 21%, respectively. Meanwhile, industries such as construction and decoration, petroleum and petrochemicals, and non-ferrous metals saw average R&D investments exceeding RMB 500 million. The innovation-driven development continued to generate new quality momentum. For example, Sinotrans Limited has been consistently investing in digital infrastructure. In 2023 alone, they filed 29 patent applications and accumulated 192 authorized patents. They introduced several logistics technologies, including virtual employees, intelligent forklifts, and automated loading systems. Baoshan Iron &Steel Co., Ltd., building upon its core steel industry, has been advancing core technological breakthroughs. In recent years, they have developed 58 high-grade oriented silicon steel products across 4 series, significantly supporting the development of the power equipment manufacturing industry. Huaneng Power International, Inc. successfully developed the first domestic set of flue gas carbon dioxide capture equipment and a 5-megawatt supercapacitor energy storage system. They obtained a total of 617 invention patents, 3,239 utility model patents, and 320 international patents over the year. Sany Heavy Industry Co., Ltd. launched over 750 new products and technologies throughout the year, adding nearly 4,000 patents. Concurrently, they advanced smart manufacturing upgrades, achieving an automation rate of 80% in production processes.

The groundwork for future industries was laid. As the new wave of technological revolution and industrial transformation deepens, future industries such as artificial intelligence, autonomous driving, and industrial automation continue to enrich the content of new quality productive forces. The companies on the SSE main board have been actively exploring cutting-edge technologies, positioning themselves in future industries, and nurturing a "second growth curve". China Mobile Limited ramped up its "BASIC6" innovation plan based on technologies such as big data, artificial intelligence, and computational networks. In 2023, they realized digital transformation revenue of RMB 253.8 billion, a year-on-year increase of 22%. Shanghai Film Co., Ltd. intensified its efforts in AI technology to explore and train large-scale models for the Chinese School of Animation. Wanhua Chemical Group Co., Ltd. explored the use of AI to assist in catalyst molecular design, reducing R&D cycles and continuously enhancing corporate competitiveness. Will Semiconductor Co., Ltd. Shanghai released TheiaCel technology in 2023, enabling automotive image sensors to better adapt to changes in light and dark scenes, actively positioning itself in the autonomous driving market and expanding market share. Ningbo Haitian Precision Machinery Co., Ltd., a high-end CNC metal cutting machine manufacturer, delivered dozens of gantry and horizontal intelligent flexible production lines in 2023, with efficiency improvements of over 20% compared to traditional production lines, helping customers achieve batch production through industrial automation.

III. Stable Production of Energy and Food Consolidates the Foundation for Secure Development, with the Sustained Manifestation of Stabilizing Livelihoods and Employment Effects

Listed companies in the grain and energy sectors maintained favorable business conditions, effectively ensuring food security and foundational energy supply. Agricultural and animal husbandry companies ensured a stable supply of important agricultural products. Heilongjiang Agriculture Company Limited realized a total grain and bean output of 6 million tons for the year, marking its 20th consecutive bumper harvest. Jiangsu Provincial Agricultural Reclamation and Development Co., Ltd. produced a total of 2.737 billion kilograms of grain and oil crops for the year, achieving historical highs both in total production and annual unit yield. In the pig farming sector, the total number of pigs slaughtered reached 7.39 million heads in 2023, representing a year-on-year increase of 73%. Coal and oil enterprises intensified efforts to increase reserves and production. Four coal companies with market values exceeding RMB one trillion, including China Shenhua Energy Company Limited, realized a total annual output of 755 million tons of commercial coal, representing a year-on-year increase of 5%. The three major oil giants collectively produced 2.941 billion barrels of oil equivalent, also marking a year-on-year increase of 5%. Utility companies ensured reliable water, electricity, gas, and heating supply. Four thermal power companies with revenues exceeding RMB one trillion, including Huaneng Power International, Inc., collectively generated 1.43 trillion kilowatt-hours of electricity for the year, representing a 2% increase year on year. Leading in hydroelectric power, the cascade hydropower stations of China Yangtze Power Co., Ltd. generated a total of 276.3 billion kilowatt-hours of electricity throughout the year, effectively alleviating electricity shortages in the region. Additionally, more than ten gas companies collectively sold approximately 60.6 billion cubic meters of natural gas.

Listed companies in passenger transportation, telecommunications, and other sectors closely related to people's livelihoods consolidated universal and foundational services through high-quality development achievements. In 2023, the three major airports - Baiyun, Shanghai, and Xiamen ensured a total of 1.3343 million aircraft takeoffs and landings, with a passenger throughput of 184 million, marking year-on-year increases of 93% and 183%, respectively. In 2023, railway transportation companies such as Beijing-Shanghai High Speed Railway Co., Ltd., Daqin Railway Co., Ltd., and Guangshen Railway Company Limited, completed a total passenger volume of 285 million and a cargo volume of 746 million tons, representing year-on-year increases of 146% and 8%, respectively. The three major telecom operators collectively reached a total of 1.374 billion users for their 5G plans, with a penetration rate exceeding 75%. SSE-listed banks continued to promote financial inclusion and people-benefiting services, with the average net interest margin narrowing by 37 BPs year on year. They made significant strides in deepening and solidifying inclusive finance initiatives.

Continued improvement in operating performance supported listed companies in maintaining relatively stable employment absorption capacity, with emerging industries witnessing an increase in employment numbers. Over the past three years, the total number of employees in the companies on the SSE main board has remained stable, hovering around 17 million. On average, each company provides approximately 10,000 job positions. Indirect employment generated through GDP proportion exceeded 200 million people, accounting for nearly 30% of the national employment population. The manufacturing sector has seen continuous growth in employment for three consecutive years. Emerging industries such as electrical equipment, electronics, automotive, and telecommunications accounted for nearly 30% of the total employment absorbed by the companies on the SSE main board in 2023.

IV. SOEs and Central Enterprises Played a Stabilizing Role in the Economy, while the Vitality of Private Enterprises Accelerated in Performance Recovery

SOEs and central enterprises fully leveraged their role as stabilizers, consolidating the fundamentals amid complex internal and external environments. In 2023, SOEs and central enterprises listed on the SSE main board collectively realized operating revenue of RMB 41.75 trillion, marking a slight year-on-year increase of 0.6%. Net profit reached RMB 3.8 trillion, remaining largely unchanged compared to the previous year. Among them, the central enterprises under the State-owned Assets Supervision and Administration Commission (SASAC) realized operating revenue of RMB 22.48 trillion and net profit of RMB 1.17 trillion, representing year-on-year increases of 1.5% and 3.8%, respectively. While maintaining steady operating performance, SOEs and central enterprises actively utilized capital market tools such as mergers and acquisitions, restructuring, and equity incentives along the main line of the three-year action plan for SOE reform to enhance corporate value and efficiency. Since 2023, 22 SOEs and central enterprises listed on the SSE main board have introduced significant asset restructuring plans. Avicopter Plc. realized the overall listing of its helicopter business unit under the Aviation Industry Corporation of China, Ltd. through asset acquisition, expanding its development opportunities in the "dual-use" helicopter sector. China Shipbuilding Industry Group Power Co., Ltd further consolidated its leading position in the industry by unifying and integrating the diesel engine power business units under the group through restructuring. In 2023, SOEs and central enterprises listed on the SSE main board launched 22 equity incentive plans. The median proportion of incentive shares to total shares reached 1.7%, maintaining a relatively high level of incentive intensity.

As the most dynamic force in the development of the national economy, private enterprises realized fairly rapid recovery in various operational indicators. In 2023, the operating revenue of private enterprises listed on the SSE main board increased by 0.9% year on year, outperforming the overall market by 0.3 percentage points. The export performance was impressive. In 2023, among companies disclosing overseas business income, nearly two-thirds were private enterprises. Their overseas business revenue and profits reached RMB 1.62 trillion and RMB 0.34 trillion respectively, representing year-on-year increase of 4% and 10%, both outperforming the market average. They played an important role in stabilizing foreign trade. There was a notable improvement in cash flow, with operating cash net inflow reaching RMB 843.9 billion, marking a year-on-year increase of 9%. The ratio of cash flow to net profit increased by 0.3 percentage points. The proactive reduction in inventory saw positive results, with an increase of 0.2 percentage points in inventory turnover rate compared to the previous year, outperforming the overall market level. The ongoing optimization of the debt structure was evident, with a decrease of 1.4 percentage points in the asset-liability ratio compared to the beginning of the year, surpassing the overall reduction in the entity by approximately 1.2 percentage points.

V. Consumer Market Vitality Surged, with New Formats and Scenarios Sparking Additional Growth

In 2023, residents showed an increased willingness to travel, leading to rapid growth in several industries including accommodation, catering, transportation, and cultural tourism. The demand for air travel far exceeded expectations, leading to a rapid increase in civil aviation passenger traffic. All companies in the aviation airport industry saw performance improvements year on year, resulting in a net reduction of losses totaling RMB 131.8 billion compared to the same period last year. Tourist attractions and the catering and hotel industry realized net profits of RMB 1.1 billion and RMB 2.2 billion, respectively. They not only reversed losses but also surpassed or reached the profit levels of the same period in 2019. The film market witnessed a continuous supply of high-quality content, resulting in a series of blockbuster hits. This trend led to the turnaround of the film and cinema industry, with a net profit increasing by 186% year on year. In the commerce and retail sector, offline formats steadily recovered throughout the year. The industry realized a net profit of RMB 16.8 billion, representing a year-on-year increase of 5%.

The quality of consumption supply continued to enhance, with increasing potential for consumption being unleashed. The performance of high-quality consumer goods in the terminal market proved favorable. The food and beverage industry provided innovative products to meet market consumption demands, achieving a net profit of RMB 133.6 billion for the year, marking a year-on-year increase of 21%. The rapid development of smart household appliances propelled the household appliance industry to achieve a net profit of RMB 27.7 billion, representing a year-on-year increase of 7%. The landscape of the beauty industry underwent reshaping, with the rise of domestic brands leading to a 42% growth in the beauty and personal care sector. The automotive industry recovered steadily, achieving a net profit of RMB 57.6 billion, representing a year-on-year increase of 25%. Consumption of new energy vehicle models led the way, with Guangzhou Automobile Group Co., Ltd. and Great Wall Motor Company Limited witnessing a year-on-year increase of 78% and 114% in sales of new energy vehicles, respectively. Net profits in the watch and jewelry industry, as well as cultural and entertainment products industries, realized a year-on-year increase of 32% and 11%, respectively.

New formats, hotspots, and scenarios continued to emerge, injecting new momentum into consumption growth. Changbai Mountain Tourism Co., Ltd. capitalized on the boom in Northeast China's ice and snow tourism, deepening the layout of ice and snow tourism products. It realized significant growth in revenue and net profit, with a year-on-year increase of 219% and 341%, respectively. This growth was driven by the integration and development of various tourism resources including skiing, ice drifting in the rime, and snow hiking. Wangfujing Group Co., Ltd. diligently created a distinctive commercial district blending traditional heritage with modern trends ("old brands + new national trends"). It continued to enhance consumer experiences and increase brand influence through bi-directional flow between online and offline channels. Sales soared throughout the year, with a remarkable increase of 264% in net profit. Beijing Tongrentang Co., Ltd. deeply explored the diverse needs of different consumer groups for health and beauty. Through product innovation, it firmly positioned itself at the forefront of consumer trends, introducing a range of health foods with medicinal properties. Additionally, Tongrentang actively promoted diversified marketing at retail terminals, resulting in stable growth in revenue and profits.

VI. Foreign Trade and Exports Showed Stable and Improved Quality, with Landmark Projects Deepening the Development of the Belt and Road Initiative

In recent years, leveraging the integrated advantages of production and supply chain support and sustained innovation capabilities, China's foreign trade and exports have demonstrated strong growth resilience. Using the throughput volume of the three major port companies, namely Shanghai International Port (Group) Co., Ltd., Ningbo Zhoushan Port Company Limited, and Qingdao Port International Co., Ltd., as a microcosm from 2019 to 2023, the total cargo throughput increased from 1.864 billion tons to 2.326 billion tons, representing a growth of 25%. Additionally, container throughput increased from 93.93 million standard containers in 2019 to 122 million standard containers in 2023, marking a growth rate of 30%. The vitality of foreign trade business among listed companies continues to surge. In 2023, the companies on the SSE main board collectively realized overseas business revenue of RMB 5.81 trillion and overseas profits of RMB 0.66 trillion, representing a respective increase of 15% and 81% compared to 2019. Currently, nearly 60% of companies have disclosed overseas revenue, with nearly 20% of these companies deriving over 50% of their total revenue from overseas operations. These companies are primarily in industries such as automotive, machinery equipment, electronics, and chemicals. The 2023 data shows that several sub-industries including aviation equipment, marine equipment, computer equipment, new metal materials, and engineering machinery maintained high export growth rates. The year-on-year growth rates of overseas revenue for these sub-industries were 54%, 38%, 33%, 22%, and 21%, respectively. Companies from various industries such as shipbuilding and wind power had robust overseas order books. China CSSC Holdings Limited signed new contracts for automotive transport ships totaling approximately US 1.46 billion. Wind power companies like Ningbo Orient Wires &Cables Co., Ltd., Jiangsu Zhongtian Technology Co., Ltd, and Ming Yang Smart Energy Group Limited capitalized on the momentum of the overseas wind power market, securing significant contracts abroad.

The "New Three" represented by new energy vehicles, lithium batteries, and photovoltaic products have become stable drivers of export growth. Great Wall Motor Company Limited and Yutong Bus Co., Ltd. experienced significant growth in global sales of new energy vehicles, with overseas business revenue reaching RMB 53.1 billion and RMB 10.4 billion, respectively. This represents year-on-year growth rates of 102% and 86%. Additionally, their profits reached RMB 13.8 billion and RMB 3.3 billion, with year-on-year growth rates of 93% and 96%, respectively. In response to this trend, automotive component companies deepened their venture into overseas markets. Leading companies in various segments of automotive components, such as Fuyao Glass Industry Group Co., Ltd., Ningbo Joyson Electronic Corp., and Ikd Co., Ltd., saw their overseas revenue grow by 15%, 12%, and 29%, respectively. Furthermore, leading photovoltaic company LONGi Green Energy Technology Co., Ltd. actively expanded its global development strategy by strategically positioning itself in Malaysia and Vietnam for monocrystalline silicon rods, monocrystalline modules, and monocrystalline cell projects. Meanwhile, Zhejiang Huayou Cobalt Co., Ltd, specializing in new energy lithium and cobalt materials, established factories in Indonesia, Africa, and other regions, leading to a year-on-year increase of 88% in nickel product shipments in 2023 and stable market share growth.

By the end of 2023, more than 200 companies on the SSE main board actively participated in the building of the Belt and Road Initiative, deeply engaging in infrastructure construction, basic service layout, and green energy transformation. A series of landmark cooperation achievements have been successfully implemented, serving as vivid interpretations of the deepening development of the Belt and Road Initiative. China Railway Group Limited and CRRC Corporation Limited participated in the construction of China's first high-speed rail project overseas - the Jakarta-Bandung High-speed Railway project, contributing to Indonesia's successful entry into the "high-speed rail era". Meanwhile, China Southern Airlines Company Limited continued to promote the construction of the "Air Silk Road", establishing a comprehensive air route network in key regions involved in the Belt and Road Initiative, such as South Asia, Southeast Asia, the South Pacific, and Central and Western Asia, to enhance trade facilitation. Additionally, the SK Hydroelectric Power Station project invested by China Energy Engineering Corporation Limited in Pakistan is the largest hydropower project undertaken by Chinese companies overseas to date. It will provide 3.2 billion kilowatt-hours of clean electricity annually, effectively alleviating energy shortages and optimizing the power structure.

VII. Steady Investment and Growth Transformation, Equipment Renewal with Multiple Effects

In 2023, with the recovery of the real economy, enterprises witnessed enhanced investment willingness and expanded investment scale. The total long-term assets expenditure for purchasing by real economy companies listed on the SSE main board reached RMB 3.10 trillion, a year-on-year increase of 12%. The upstream energy extraction industry continued to increase investment in capacity expansion and transition towards green and intelligent transformation. The investment growth rates in the petroleum, coal, and non-ferrous metal industries reached 13%, 21%, and 28%, respectively. High-tech industries seized the opportunities of the era to accelerate the cultivation of new momentum, with investment growth rates in industries such as aviation equipment, rail transit equipment, photovoltaic equipment, and software development reaching 25%, 13%, 83%, and 51%, respectively. It is worth noting that the recovery in consumption indirectly drove the expansion of investment in related industries, with investment growth rates in household appliances, textiles and clothing, and cosmetics, closely related to end-consumer demand, reaching 21%, 37%, and 39%, respectively.

Infrastructure investment also maintained rapid growth. Investment in road transportation, aviation transportation, and water transportation increased by 15%, 53%, and 14% respectively. The nine leading infrastructure companies, including China State Construction Engineering Corporation Limited, China Railway Construction Corporation Limited, and China Railway Group Limited signed new contracts totaling RMB 16.8 trillion throughout the year, representing a year-on-year increase of 8%. The overall investment growth rate in the infrastructure industry reached 14%. Against the backdrop of energy structure transformation and a new round of power grid investment expansion, power equipment companies were deeply engaged in the collaborative construction of the new power system's transmission, transformation, distribution, and utilization industry chain, with investment growing by 27%. In line with the expansion of infrastructure investment and the release of demand due to a new round of equipment updates, some equipment manufacturing industries saw rapid growth in operating performance, with the net profits of general equipment manufacturing and engineering machinery industries increasing by 27% and 9%, respectively, compared to the previous year. Several leading companies realized rapid growth in performance. In the industrial vehicle sector, industry leaders Anhui Heli Co., Ltd. and Hangcha Group Co., Ltd., saw their revenues maintain high-level growth, with net profits increasing by 41% and 74% respectively year-on-year. In the high-end CNC machine tool industry, industry leader Ningbo Haitian Precision Machinery Co., Ltd. saw a year-on-year increase of 17% in net profit. Benefiting from the advancement of intelligent construction in upstream coal mines, leading coal mining equipment companies Zhengzhou Coal Mining Machinery Group Co., Ltd. and Tian Di Science &Technology Co., Ltd. saw their net profits increase by 29% and 21%, respectively.

VIII. Growing Environmental Awareness: Improved Quantity and Quality in ESG Disclosure

In recent years, the companies on the SSE main board have made concerted efforts to embrace the concept of green and low-carbon development. Consequently, the disclosure of Environmental, Social, and Governance (ESG) information has transitioned from being guided to being voluntarily disclosed. In 2023, a total of 952 companies disclosed specialized reports on ESG, social responsibility, and sustainable development, accounting for an increased proportion of 56%. These reports predominantly highlighted the prominent social contributions and societal value of the companies on the SSE main board. Among them, the disclosure rates were 100% for companies listed on the SSE 50 Index and over 90% for those on the SSE 180 Index. 790 companies have been disclosing ESG-related reports for over three consecutive years, and over 600 companies have been doing so for over five consecutive years, indicating the formation of a stable group of companies committed to disclosing sustainable development information. At the same time, the market attention to ESG continues to rise. As of the end of 2023, a total of 138 sustainable development indices had been released, including 104 stock indices, 31 bond indices, and three multi-asset indices. 86 fund products were being tracked, with a combined scale of RMB 105 billion.

In terms of environmental protection, 1,404 companies have established environmental protection mechanisms. In 2023, the investment in environmental protection-related funds amounted to nearly RMB 190 billion, a year-on-year increase of about 27%. Additionally, 1,361 companies have implemented carbon reduction measures, resulting in a reduction of approximately 820 million tons of CO2 emissions. Among them, in 2023, Huaneng Power International, Inc., realized a low-carbon clean energy installed capacity accounting for 31%. China Yangtze Power Co., Ltd., produced 276.3 billion kilowatt-hours of clean electricity in 2023, equivalent to replacing the consumption of 83.07 million tons of standard coal and reducing CO2 emissions by 227 million tons. Guangzhou Automobile Group Co., Ltd. realized remarkable growth in production and sales of new energy vehicles, increasing by 81% and 78%, respectively, reaching new highs. In the field of green finance, green bonds continued to gain momentum, empowering sustainable initiatives. The total issuance amount in the SSE bond market reached RMB 55.4 billion for the whole year.

In terms of social contribution, 774 companies actively fulfilled their social responsibilities in poverty alleviation and rural revitalization. The total investment in poverty alleviation exceeded RMB 100 billion in 2023, benefiting a total of 30.06 million people through relevant projects. Shanghai Fosun Pharmaceutical (Group) Co., Ltd.'s Rural Doctor Project covered 78 key counties for assistance, with a total of 366 missions dispatched to assist counties, safeguarding 24,000 rural doctors and benefiting 3 million rural families. China Mobile Limited arranged exclusive tariff discounts, benefiting a total of 6.2 billion people, striving to achieve affordable digital services for all through precise fee reductions. China Railway Construction Corporation Limited invested and introduced assistance funds totaling RMB 110 million, training 1,385 grassroots rural cadres, leaders in rural revitalization, and professional technical personnel. The People's Insurance Company (Group) of China Limited directly purchased and assisted in selling agricultural products from designated assistance counties and other poverty-alleviating areas, amounting to RMB 64.48 million. They also directly invested RMB 45 million in gratuitous assistance funds and provided training for a cumulative total of 8,154 grassroots rural revitalization cadres, technical personnel, and leading figures in wealth generation.

IX. Over a Hundred Companies had a 5%+ Dividend Yield, while Multiple Companies Promoted the Story of China Internationally

The investment landscape presented a new outlook, with listed companies actively engaging in corporate value and return enhancement action plan, emphasizing dividends, buybacks, and shareholding increases as immediate measures, while adhering to long-term strategies focused on optimizing management and strengthening innovation and R&D. In 2023, the cash dividend scale of the companies on the SSE main board reached a new high, with a total of 1,290 companies announcing dividend plans. The total annual dividends amounted to RMB 1.70 trillion, with an average dividend ratio of 40.22% and a dividend yield of 3.74%. Among them, 1,028 companies have implemented dividends for three consecutive years, with nearly 1,100 companies having a dividend ratio of over 30%. 25 companies have dividends exceeding RMB 10 billion, with Industrial and Commercial Bank of China Limited and China Construction Bank Corporation having dividends exceeding RMB 100 billion. Additionally, 121 companies have a dividend yield exceeding 5%. It is worth mentioning that nearly a hundred companies have disclosed their interim dividend plans for 2023. Multiple companies, including the five major banks, have announced that they will implement interim dividends in 2024, indicating a growing trend of multiple dividend distributions throughout the year. The enthusiasm for buyback and shareholding increase remained strong, with 187 companies announcing buyback plans during the year, totaling RMB 20 billion in buybacks. Additionally, 182 listed companies saw increased shareholder participation, an increase of 53 companies compared to the previous year, with a total increase in shareholdings reaching RMB 20.2 billion.

Meanwhile, the companies listed on the SSE have increased their communication efforts and frequency with overseas investors, building upon the normalization of performance briefing sessions. A number of companies have proactively reached out to promote the story of China to international audiences. High-quality companies from various industries, such as consumer goods, healthcare, finance, and high-end manufacturing, have conducted over a hundred promotional activities for about ten times in countries like the United States, Germany, and Switzerland. These activities reaffirmed China's determination to deepen capital market openness and its welcoming stance towards foreign investment, sending positive signals. In addition, against the backdrop of the Belt and Road Initiative, over a dozen high-quality companies listed on the SSE, including China Petroleum &Chemical Corporation and Jiangsu Hengrui Pharmaceuticals Co., Ltd, have visited the Middle East region, including Saudi Arabia and the United Arab Emirates. They have actively strengthened communication with local investors while exploring business cooperation opportunities, and implementing their international expansion strategies. In terms of attracting investment, a total of 20 international investor events were held throughout the year, inviting investors to learn more about companies listed on the SSE. These events focused on six major themes, including the Zhangjiang High-Tech Park, information technology, healthcare, automotive industry chain, Hunan province, and central enterprises. In these events, representatives from 50 companies on the SSE main board engaged in "face-to-face" communications with 80 international investment institutions.

X. Blue Chip Stock Valuations Shown Significant Improvement, with Foreign Investors Increasing Their Holdings in Nearly a Thousand Companies

Since 2023, the valuations of blue chip companies listed on the SSE main board have significantly improved, with increasing market attention and recognition. The overall price-earnings ratio of companies listed in the constituents of the SSE 50, SSE 180, and SSE 380 indexes increased by 1.4 compared to the beginning of 2023, with the average cumulative stock price increase outperforming the broader market by 4.6 percentage points. The overall price-earnings ratios of companies with market capitalization above RMB 100 billion and above RMB 50 billion increased by 1.6 and 1.3, respectively, compared to the beginning of 2023. The average cumulative stock price increases outperformed the broader market by 21 and 18 percentage points, respectively. For central enterprises, the overall price-earnings ratios increased by two since the beginning of 2023. Since 2023, the average cumulative stock price increase has outperformed the broader market by approximately eight percentage points. In addition, the influx of incremental funds into ETFs to allocate to high-quality blue chip stocks has become a major characteristic. In 2023, the net inflow of funds into ETFs on the SSE amounted to RMB 430.1 billion, with broad-based ETFs such as the SSE 50 and CSI 300 ETFs receiving a net inflow of RMB 181.5 billion.

It's worth noting that technology-innovative blue chip companies have shown higher valuation levels and liquidity. Companies listed on the SSE main board with R&D intensity exceeding 5% and 10% had average price-to-earnings ratios of 42.5 and 75.6, respectively, both higher than the market average and showing growth compared to early 2023. Similarly, their average price-to-book ratios stood at 2.4 and 2.94, respectively, also above the market average. In terms of liquidity, their annual turnover reached RMB 17.04 trillion and RMB 6.79 trillion, respectively, marking a year-on-year increase of RMB 1.49 trillion and RMB 1.29 trillion, respectively, with their respective shares of turnover rising by approximately 5 and 3 percentage points.

At the same time, overseas capital continues to show a high interest in the domestic market. On the one hand, the value investment potential of the SSE main board continues to attract inflows of overseas funds, with the net purchases through the SSE Shanghai Stock Connect exceeding RMB 60 billion since 2023. On the other hand, overseas investors have a relatively positive view of China's medium to long-term development prospects. Currently, the SSE main board, represented by the Shanghai Stock Connect, Qualified Foreign Institutional Investors (QFII), and RMB Qualified Foreign Institutional Investors (RQFII), has a total foreign ownership of RMB 1.59 trillion. 912 companies have seen increased holdings by foreign investors, indicating continuous breakthroughs in high-level openness.

XI. The Consolidation of the Delisting Ecosystem Continued, With a Renewed Sense of Responsibility

In 2023, the SSE main board continued to consolidate the normalized delisting mechanism, strictly enforcing delisting rules, adhering to the principle of "delisting as needed", and cracking down strictly on violations that evade delisting or pose delisting risk warnings. Since the beginning of 2024, a total of eight companies listed on the SSE main board have been scheduled for delisting. Among them, three companies have triggered delisting due to trading-related reasons, one company has triggered delisting due to significant violations of law, and four companies have triggered delisting due to financial issues identified after the annual report disclosure. Additionally, 21 companies have triggered financial-related delisting indicators after annual report disclosure and were subject to delisting risk warnings.

After the issuance of the new "Nine Policies of State Department", the responsibilities of accounting firms have been further reinforced, leading to enhanced capabilities in identifying financial distortions and internal control failures in listed companies. In the 2023 annual reports, 41 companies received audit opinions with disclaimers or reservations, an increase of 12 from the previous year. Additionally, 23 companies received adverse opinions or disclaimers on their internal controls, marking an increase of nine compared to the previous year. Among them, three companies were scheduled for delisting due to audit opinions with disclaimers on their financial reports issued after the disclosure of their annual reports; 12 companies received other risk warnings due to adverse opinions on internal controls or the inclusion of emphasis of matter paragraphs highlighting significant uncertainties about their ability to continue as a going concern in the audit opinions.

The reform of the independent director system has been implemented, clarifying the responsibilities and status of independent directors, strengthening guarantees for their performance, and ensuring that they play a role in corporate governance by participating in decision-making, providing oversight, and offering professional advice. In the 2023 annual reports, 15 independent directors from 9 companies listed on the SSE main board abstained or voted against in board meetings, raising objections to the truthfulness, accuracy, and completeness of the annual report disclosures, thereby revealing company risks and further promoting the improvement of corporate governance systems.

XII. Some Industries Still Require Attention to Risks, with Overall Performance Expected to Improve Throughout the Year

In 2023, the overall performance of the companies on the SSE main board improved steadily, with most industries experiencing better operating performance results. Industries such as consumer goods and new quality productive forces showed promising performances, although a few industries still experienced declines or losses. In the first quarter of 2024, the companies on the SSE main board realized total operating revenue of RMB 11.91 trillion, a net profit of RMB 1.16 trillion, and a net profit after deducting non-recurring gains and losses at RMB 1.13 trillion, marking a year-on-year decrease of 1.9%, 3.8%, and 2.5%, respectively. The real estate and chemical industries continued their downward trends, while the steel and construction decoration industries shifted from growth to decline.

With the successive implementation of policies related to infrastructure and real estate, favorable conditions supporting investment and consumption are increasing, indicating a potential for continued steady recovery in the market. In the first quarter, the aviation transportation industry realized a year-on-year turnaround from losses; the net profit of the automotive manufacturing industry realized a year-on-year increase of 55%, with further expansion in growth rate; several related industries such as catering and hotels, furniture manufacturing, continued their growth momentum; the performance of the machinery equipment industry overall rebounded, with a 9% growth in the first quarter, and multiple sub-sectors such as engineering machinery, rail transit equipment, and automation equipment maintained growth. Overall, with positive factors continuing to accumulate, the outlook for the full-year performance remains promising.