Xiao Gang, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), said China's decision to set up a stock exchange in Beijing and build it into a primary platform serving innovation-oriented small- and medium-sized enterprises (SMEs) is of strategic significance to the country's capital market reform.

Over the years, China's National Equities Exchange and Quotations (NEEQ), or "new third board", has laid a solid foundation to create the new stock exchange, with outstanding progress made in reforming its fundamental rules for listing and trading, especially since last year, said the former chairman of the China Securities Regulatory Commission. Nearly 8,000 companies are now listed on the NEEQ and 90 percent of them are private SMEs.

The new bourse will enable the capital market to better meet the needs of SMEs, which play an important role in the country's economy, as well as nurture a group of high-quality SMEs that are specialized and innovative, and help foster a multi-layer capital market, Xiao said.

While explaining the close relationship between the capital market and trade in services, Xiao said the Beijing Stock Exchange will offer great development opportunities for modern service industries, such as accounting, auditing, appraisal and rating. It will also spur regulatory practices in the services sector to align with high-standard international free trade agreements, thus opening new space for international cooperation.