China's financial markets are witnessing a transformative step as securities firms pioneer the issuance of science and technology innovation bonds (Sci-Tech Bonds) in the interbank market, broadening access to capital for high-tech enterprises. On June 26, 2025, CITIC Construction Investment Securities launched the first such issuance, marking a milestone in deepening the integration of finance and innovation.

This initiative follows approvals from the People's Bank of China (PBoC) granted earlier this year to five leading securities firms—CITIC Securities, China International Capital Corporation (CICC), Guotai Junan Securities, CITIC Construction Investment Securities, and Huatai Securities—authorizing a combined issuance quota of RMB 55.8 billion. These licenses, valid for two years, represent a medium-term commitment to channeling financial resources directly into China's innovation-driven sectors.

Expanding Financing Channels for Technology Enterprises

Since the PBoC and China Securities Regulatory Commission jointly issued guidance in May 2025 to encourage financial institutions, technology companies, private equity, and venture capital firms to issue Sci-Tech Bonds, the market has responded rapidly. More than 30 securities firms have collectively issued over 36 Sci-Tech Bonds exceeding RMB 30 billion on exchange platforms.

The authorization for securities firms to issue these bonds in the interbank market—larger and more liquid than exchange platforms—marks a strategic expansion. According to Zhou Yun, Director of the State-Owned Capital Operation Research Center at Shanghai National Accounting Institute, “This broadens the funding spectrum, enabling brokers to raise larger amounts at more competitive costs, ultimately benefiting technology enterprises by easing their financing constraints.”

Targeted Capital for Innovation: A Strategic Priority

China's central financial policy prioritizes “technology finance” as a cornerstone alongside green, inclusive, pension, and digital finance initiatives. Sci-Tech Bonds are integral to this approach, serving as a conduit through which securities firms act as capital intermediaries dedicated to supporting innovative enterprises.

Industry experts emphasize that Sci-Tech Bonds will:

Alleviate financing challenges for innovation firms by providing long-term, low-cost capital tailored to sectors where traditional lending is constrained by high risk and collateral scarcity.

Optimize capital market structure, directing long-term funds to strategic industries such as integrated circuits, artificial intelligence, and biomedicine, accelerating industrial upgrades.

Enhance market sophistication, through innovative credit enhancement mechanisms—like intellectual property pledges and data-backed collateral—that enrich risk assessment beyond conventional financial metrics.

Securities Firms Evolving: From Issuers to Market Anchors

Beyond issuing bonds, securities firms are rapidly developing capabilities to underwrite, market-make, and provide comprehensive services along the Sci-Tech Bond lifecycle. Wind data reveals that since early May, 55 securities firms have underwritten more than RMB 300 billion in Sci-Tech Bonds, with CITIC Construction Investment and CITIC Securities leading the pack.

This evolving role transforms the brokers'business ecosystem, integrating financing, investment, and exit strategies to unlock new profit streams. Analyst Li Yong from Soochow Securities highlights, “The Sci-Tech Bond market allows brokers to strengthen their capital intermediary function, diversify revenue, and improve asset-liability management under intensified regulatory scrutiny.”

What International Financial Institutions Should Watch

For foreign banks, asset managers, trade insurers, and legal advisors, this development signals a shift towards more sophisticated, targeted innovation finance in China:

Access to broader, cost-efficient capital: With securities firms able to tap the deep interbank market, funding for innovation-driven firms is becoming more scalable and affordable.·

Complex credit assessment:The inclusion of intellectual property and data assets in collateral frameworks demands more nuanced risk modeling and due diligence from international investors.

Improved liquidity and transparency: The interbank market's expanding role offers enhanced price discovery and portfolio diversification opportunities essential for global fund managers.

Strategic partnership potential: Securities firms are emerging as vital intermediaries. International players benefit by engaging with them to navigate local regulatory environments and co-invest in China's technology future.

China's bold step to open the interbank market for broker-led Sci-Tech Bonds signals a maturing financial system focused on precision allocation of capital to innovation. For global market participants, understanding these dynamics is critical—not only for compliance and risk management but also to capitalize on China's next wave of technology-driven growth.