China to establish national venture capital fund to drive innovation

China will establish a national venture capital guidance fund in the near future with the aim of strengthening the development of innovative enterprises, Zheng Shanjie, head of the country's top economic planner, said Thursday in Beijing. 

The new fund is designed to address common funding shortages faced by tech firms in their early stages, effectively leverage venture capital to support technological innovation, accelerate the commercialization of major sci-tech achievements, enhance technological self-reliance, and develop new quality productive forces, Zheng said.

The fund will exist for 20 years, making it longer-lasting than typical equity funds, and is expected to attract local government and private investment of nearly 1 trillion yuan ($138.15 billion), he said. It will focus on cutting-edge areas including artificial intelligence (AI), quantum technology, hydrogen energy, and energy storage, Zheng added.

He stated that a market approach will be adopted to invest in start-ups and early-stage enterprises, while also giving consideration to small, medium and micro-sized enterprises in their early to mid-growth stages, in order to support original and disruptive innovations, facilitate core technological breakthroughs, and foster the development of strategic emerging and future industries.

The initiative came after the government work report, released on Wednesday at the opening meeting of the annual session of the National People's Congress, the country's national legislature, specified that the country will strive to develop new quality productive forces in light of local conditions and accelerate the development of a modernized industrial system, requiring properly handling the relationships between fostering new growth drivers and upgrading old ones.