China has unveiled a series of new measures aimed at advancing the high-quality development of venture capital (VC) investment, focusing on expanding capital sources, improving exit mechanisms, and optimizing the market environment to bolster the nation’s scientific and technological innovation.
At a press conference on Wednesday, Li Chunlin, Deputy Director of the National Development and Reform Commission, emphasized the pivotal role of venture capital in promoting a virtuous cycle of technology, industry, and finance. “Developing venture capital is a key step to fostering this cycle,” Li stated, highlighting how VC investment is crucial in supporting the rapid growth of China’s “little giant” firms and unicorn companies.
These “little giants” are innovative small and medium-sized enterprises (SMEs) engaged in specialized niche markets and equipped with cutting-edge technologies. According to official data, China has nurtured over 12,000 such firms and boasts 369 unicorn companies—startups valued at over \$1 billion.
The newly released measures include efforts to encourage long-term funds, such as insurance funds, to channel into venture capital. Asset managers will be supported in expanding their investment in VC, enriching the types of VC funds available. Furthermore, a mechanism will be established to connect venture capital with innovative and entrepreneurial projects, providing VC institutions with access to high-quality projects aligned with national development goals and strategic priorities.
To support the growth of SMEs, China plans to promote the industrialization of patents, continue implementing preferential tax policies for VC enterprises, and apply differentiated regulation that aligns with the characteristics of venture capital funds. The country also aims to expand the orderly opening up of VC investment, broadening exit channels, and optimizing exit policies for VC funds.
“We should prudently introduce contractionary and inhibitory measures, release more policy dividends, stabilize market expectations, and activate the venture capital market,” Li added, underscoring the government’s commitment to fostering a vibrant and supportive environment for venture capital investment.
These initiatives reflect China’s strategic move to leverage venture capital as a driving force for technological innovation and economic growth, ensuring that both emerging enterprises and investors can thrive in a dynamic and forward-looking market.
Reference(s):
cgtn.com
