China weighs new high-tech stock venue in battle with Hong Kong, people say

China is expanding efforts to keep its most promising companies from going public in Hong Kong or the US, with officials studying a new trading venue in Shanghai that would have lower thresholds for biotechnology and high-tech firms, people with knowledge of the matter said.

Government entities including the China Securities Regulatory Commission and Ministry of Science and Technology are studying the proposal, said the people, who asked not to be named discussing private information. The new market, which might waive earnings and revenue requirements, would operate at the Shanghai Stock Exchange, the people said.

The talks are the latest example of Chinese authorities looking at ways to boost the domestic market, which has in recent years seen businesses worth more than US$1 trillion head to overseas exchanges. Regulators are drawing up rules for Chinese depositary receipts that would allow companies such as Alibaba Group Holding Ltd. to list shares onshore, and efforts are underway to encourage home-grown large tech firms, known as unicorns, to debut in Shanghai or Shenzhen.

China’s biotech and high-tech venue could open as early as next year, according to the people. The market may have minimum investor thresholds to prevent some individuals from investing in risky start-ups, they said. Officials are concerned that new rules in Hong Kong that dropped revenue and profit requirements for biotech companies could lure away such businesses.