Financing the Mining Industry in China

Abstract

China's central government has historically taken the leading role in financing the country's mining industry. After 1998, a market-oriented financing system began to develop. Bank loans, corporate bonds, trusts, project financing, and finance leases have been employed to fund the Chinese mining industry. In addition, in recent years private equity investment and initial public offerings or new shares issued by companies on the stock exchange's primary market have been used frequently by mining enterprises. More private equity funds have emerged in the aftermath of the global finance crisis. The Tianjin Equity Exchange established a mining board to get financing for small and medium-size mining enterprises. Nevertheless, the stock market in China still does not provide enough financing opportunities for small and medium-size mining enterprises. This article suggests that the Growth Enterprises Market of the Shenzhen Stock Exchange should establish a mining exchange in order to support the sector's development more robustly.