China Opens STAR Market to Unprofitable AI Companies
China’s top securities regulator has announced a landmark policy expansion that will allow unprofitable artificial intelligence startups to list on Shanghai’s STAR Market, marking a strategic push to channel domestic capital into the country’s most promising technology companies amid intensifying global competition with the United States.
CSRC Chairman Wu Qing unveiled the policy at the 2026 Lujiazui Forum in Shanghai on June 17-18, confirming that the STAR Market’s “fifth listing standard” — originally designed for unprofitable biotech and semiconductor firms — will now be expanded to include AI large-model companies. The Shanghai Stock Exchange simultaneously released formal guidance specifying how these companies can qualify, effective immediately, according to Caixin Global.
What the Policy Change Means
The fifth listing standard uses “market value plus R&D” as evaluation criteria rather than traditional profit metrics, making it accessible to companies that require massive upfront investment before generating revenue. To qualify under the expanded rules, AI companies must have at least one large-model product that has completed launch and achieved large-scale application. The expansion covers both general-purpose large models and industry-specific models.
As the Global Times reported, Wu Qing stated at the forum that “a new wave of technological revolution, led by AI, is being integrated into production and daily life at an unprecedented pace,” adding that “major capital markets around the world are accelerating reforms to better adapt to the needs of innovation and gain leading positions.”
Strategic Context: The Global AI Race
The policy shift comes at a critical juncture in US-China technology competition. Wall Street is currently hosting major initial public offerings from SpaceX, OpenAI, and Anthropic, highlighting the global race for AI capital. Beijing’s response is to create a domestic capital ecosystem that can compete with US markets in supporting AI innovation.
According to Reuters via the Economic Times, the CSRC will also support listings of startups in “future industries” including quantum technology, nuclear fusion, and brain-computer interfaces, alongside the AI-focused STAR Market expansion.
Who Stands to Benefit
The policy is expected to benefit a range of leading Chinese AI companies. Zhipu AI, one of China’s foremost large-model developers, has already seen its STAR Market IPO mentorship status advance to “mentorship completion” on the CSRC website, signaling an imminent listing. The company is reportedly planning up to 15 billion yuan in A-share fundraising.
MiniMax, another major AI player with an annual recurring revenue of $300 million as of May 2026, has formally announced its intent to list on the STAR Market. Other potential beneficiaries include DeepSeek, Moonshot AI, StepFun, and Baichuan AI.
The policy also extends beyond pure AI software companies. Hardware giants are lining up for STAR Market IPOs, including memory chip manufacturer CXMT (seeking 29.5 billion yuan), NAND flash leader YMTC, and humanoid robot maker Unitree Robotics, which recently won SSE listing committee approval for its IPO.
Expert Reactions
Tian Yun, a Beijing-based veteran economist, told the Global Times that incorporating the AI sector into the fifth listing standard “will open a direct financing channel for high-quality unprofitable AI enterprises, enabling them to secure long-term, stable, and large-scale capital support that better meets their rapid development needs.”
Gao Tingfan, an associate professor at the Capital University of Economics and Business, explained to China Daily that “original and disruptive technological innovation may not be supported by traditional banking and credit systems. It must depend on risk capital provided by equity financing, especially public market financing. Being open to quality unprofitable companies is indeed helping to build an infrastructure for China’s innovation-driven development.”
Broader Market Reforms
The STAR Market expansion is part of a broader package of capital market reforms announced by Wu Qing. These include the introduction of a growth tier for unprofitable tech companies with a “U” designation, a pilot program for yuan foreign-exchange futures, support for qualified foreign institutional investors in treasury bond futures, and a pre-review IPO mechanism for quality tech firms.
The CSRC also highlighted its regulatory track record, having investigated over 1,300 cases and levied 35.3 billion yuan ($5.2 billion) in fines as part of market stabilization efforts. The technology sector now accounts for more than 30% of total A-share market capitalization, with tech enterprises representing 45% of companies valued over 100 billion yuan.
Analysis: Implications and Risks
The policy aligns with China’s 15th Five-Year Plan (2026-2030), which emphasizes building a full-chain cultivation system for future industries including AI, quantum technology, biomanufacturing, and embodied intelligence. By offering a domestic listing pathway, China aims to retain its best AI companies that might otherwise seek overseas listings — a concern heightened by ongoing US-China tensions.
For investors, the policy opens direct exposure to China’s AI champions, potentially capturing value that previously flowed to overseas markets. However, the move carries risks. Allowing unprofitable companies to list could fuel speculative bubbles in AI stocks, as seen in previous Chinese tech market cycles. Questions also remain about corporate governance standards and whether Chinese AI companies meet international transparency requirements.
Geopolitical risk is another factor: US sanctions or export controls could impact Chinese AI companies’ access to advanced chips and technology, potentially affecting their growth trajectories post-listing.
What to Watch Next
Industry observers are closely watching for the first AI large-model company to actually list under the expanded fifth standard. Zhipu’s advanced IPO mentorship status suggests it could be the first to test the new rules. The valuation of these unprofitable AI companies will also be a key indicator — Zhipu’s proposed 15 billion yuan raise provides an early data point.
The global reaction will be equally significant. As Chinese AI companies gain access to deep domestic capital pools, the competitive dynamics of the global AI industry may shift, potentially drawing scrutiny from US regulators and reshaping international IPO flows.
For now, China has made its intentions clear: it is building a capital market infrastructure designed to nurture its most strategic technology companies from startup to global champion, without requiring them to seek funding abroad.