The Beijing Stock Exchange (BSE) has marked its fourth anniversary, achieving a market capitalisation of 900 billion yuan (approximately USD 129.1 billion). However, the exchange has been primarily shaped as a political instrument designed to support strategically important small and medium-sized enterprises (SMEs), rather than functioning solely as a high-volume trading market. This strategic focus has been accompanied by ongoing challenges related to market liquidity.

Strategic Focus on “Little Giants”

Established as China’s third stock exchange, the BSE’s primary objective is not to compete directly with the Shanghai or Shenzhen exchanges. Instead, it aims to provide crucial capital to innovative small businesses, often referred to as ‘Little Giants’, operating in sectors such as advanced manufacturing and industrial software.

More than 80 per cent of companies listed on the BSE operate in strategically important sectors, with 53 per cent categorised under China’s ‘Little Giants’ initiative. To facilitate access for these companies, the BSE has streamlined listing requirements and accelerated approval processes. This policy has led to a substantial increase in listings, from 81 companies in 2021 to over 290 by the end of 2025.

Market Liquidity Challenges

Despite the rise in listed companies, the BSE has contended with low market liquidity. The exchange recorded an average daily turnover of 77 million yuan during the final quarter of 2025, representing a 35.7 per cent decrease compared to the previous year.

This diminished liquidity is largely attributed to the composition of its investor base. Institutional investors constitute less than 10 per cent of the total investors engaging in transactions on the BSE. Furthermore, many of the listed companies operate in manufacturing sectors, which typically require longer periods to generate significant returns, thereby reducing interest from short-term investors.