IN HIS SPEECH AT THE OPENING of the first China International Import Expo in Shanghai on Monday, President Xi Jinping said that China will launch a science and technology innovation board on the Shanghai Stock Exchange and experiment with a registration system for listed companies. Beijing Youth Daily comments:

China has been paying great attention to promoting technological innovation by means of the capital market. For that purpose, it established a small- and medium-sized enterprise board and startup board on the Shenzhen Stock Exchange. These two boards are working well, but not as well as expected. Which is because they still follow the old rules and are much too conservative.

The planned innovation board will learn from the past and follow new rules, so as to truly propel innovation.

One of the most important changes is the market will decide whether an enterprise is listed on the board. That will help unleash the most potential from the innovation enterprises.

Of course, the registration system will be regulated. But this does not mean abandoning management altogether. It does not mean that enterprises can do whatever they want. Strict standards and procedures will need to be applied, and more attention paid to information disclosure in the acceptance, review, and registration of companies on the board.

The institutional innovation of the science and technology board can also be reflected in the flexible mechanism of the shareholding structure of listed companies. Many venture capital enterprises in China adopted the equity design of "shares with different rights" in the initial stage of entrepreneurship, which became an obstacle to their listing. As a result, many enterprises had to go public abroad. The establishment of the science and technology board, can open a door to these companies.

To be a success, the new board will need to pay more attention to the quality of listed companies and investor protection to stimulate market vitality and innovation.