As of the end of May 2018, the number of IPO applications awaiting approval by the securities regulator had fallen from 895 in June 2016 to only 279. The gradual draining of the "IPO quake lake" stems from the strengthening of approval oversight, which has resulted in 150 applications being rejected by the regulator in the past three years. 

“In the past, many companies thought that they had it made, just by being listed. But recent reviews by the CSRC show that the regulator is strictly monitoring the operations of listed companies and that those which violate regulations will pay the price for it,” said Yang Zhongning, an investment consultant of Industrial Securities.

“So many listed companies are no longer under the impression that a successful IPO application is the end of things. That's why many companies, especially those with poor fiscal performance, have given up on going public,” Yang added.

Further dampening the sentiment for IPOs, the CSRC said in March that companies which fail to gain approval would be banned from attempting backdoor listings for three years. Some 300 companies have withdrawn their IPO applications since the beginning of 2017. As of last Friday, only 39 companies had applied for IPOs on the A-share market in the first six months of the year, a decline of 70 percent from the same period in 2017. 

While companies are now more cautious about going public, experts believe this amounts to the government's giving more signs of support for the real economy as opposed to just supporting activity on the stock market. 

“China will be strongly supporting the real economy in the next two to three years, and is also offering strong support to the issue of CDRs” said Cai Junyi, chief analyst at Shanghai Securities. “Though the number of successful IPOs is falling, there will still be many companies planning to go public. In other words, China is widening the path for the development of the new economy.”

The government's effort is also reflected in increased support for start-up companies. Several commercial banks have been issuing plans to support the financing needs of unicorn companies, and cities including Hangzhou, Guangzhou and Suzhou are also planning to set up incubators for potential start-up companies.