The following document is a series of Chinese government policy measures designed to provide greater financing to tech startups. The measures encourage the use of more exotic—and potentially riskier—means of financing, such as lending by non-bank financial institutions, pension fund investment in smaller tech companies, and the use of credit derivatives. The measures urge the government to adopt a new scheme for scoring the innovativeness of tech companies, so as to channel public and private investment and incentive policies to benefit the high scorers.

An archived version of the Chinese source text is available online at:    https://perma.cc/4M84-TMAS

Certain Policy Measures to Accelerate the Construction of the Science and Technology Finance System and Strongly Support a High Level of Self-Reliance in Science and Technology

Developing science and technology (S&T) finance is the essential path to deepening the integration of S&T innovation with industrial innovation, and financial capital is an important force supporting high-level self-reliance (自立自强) in S&T. The following policy measures are hereby proposed to accelerate the construction of a S&T finance system adapted to S&T innovation, and to support a high level of self-reliance in S&T and the construction of China into an S&T powerhouse.¹

A. Overall Requirements

In order to thoroughly implement the spirit of the 20th Party Congress and the Third Plenum of the 20th Central Committee, conscientiously implement the arrangements made by the National Science and Technology Conference and the Central Financial Work Conference, and advance the great task of S&T finance, we shall coordinate the development of policy instruments including venture capital, bank loans, the capital market, S&T insurance, and bond issuance, to provide total life-cycle, end-to-end financial services for S&T innovation, guide long-term capital, patient capital, and high-quality capital into S&T innovation fields, accelerate the development of a S&T finance system with Chinese characteristics, form a diversified, multi-tiered, and multi-channel pattern of investment in S&T, and strengthen financial services for national strategic S&T forces such as national laboratories and leading S&T enterprises, thereby providing robust financial support for major national S&T tasks and for small and medium-sized S&T enterprises.

B. Leveraging venture capital’s role as a provider of new fresh forces (新生力军) supporting S&T innovation

1) Establish a “National Venture Capital Guidance Fund.” Leverage the important role of the National Venture Capital Guidance Fund in supporting S&T innovation, prioritize the growth of S&T enterprises as a key direction, incubate and develop strategic emerging industries, particularly future industries, and promote the conversion of major S&T achievements into real productive forces, so as to accelerate the achievement of a high level of self-reliance in S&T, and to incubate and develop new quality productive forces (新质生产力).

2) Broaden funding sources for venture capital funds. Expand the scope of the pilot program for equity investments by financial asset investment companies (AICs)² to the provinces where the 18 cities [currently in the pilot] are located, and support insurance funding in participating in AIC equity investment pilot programs. Support venture capital institutions and industrial investment institutions in raising funds by issuing bonds, so as to broaden direct financing channels. Encourage social security funds to invest in equity funds—within their operational scope and subject to their risk management requirements—in order to support S&T innovation. Optimize management mechanisms, support the participation of insurance funding in venture capital investments in accordance with market principles, and advance pilot reforms for the long-term investment of insurance funding. Guide wealth management companies and trust companies to participate in venture capital investing, in accordance with laws and regulations.

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1. Translator’s note: This translation renders the Chinese word 强国 qiángguó—which literally means “strong nation” and is sometimes translated “superpower”—in English as “powerhouse,” as in the phrase “S&T powerhouse” (科技强国). For a more thorough discussion in English of the Chinese word qiángguó, see: https://www.newamerica.org/cybersecurity-initiative/digichina/blog/lexicon-wangluo-qiangguo/.
2. Translator’s note: In China, a financial asset investment company (AIC; 金融资产投资公司) is defined as a non-bank financial institution that conducts debt/equity swaps and supporting services for companies, just as a bank does. The main shareholder of an AIC is typically a bank.