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Business / Economy

Govt to promote venture capital

By Zhang Yue and Hu Yongqi (China Daily) Updated: 2016-09-02 10:05

Premier Li Keqiang says that investments should be driven by market demand

Comprehensive guidelines will be issued by the State Council, China's Cabinet, to ensure the healthier and more sustainable development of venture capital.

The new guidelines were approved on Thursday at the State Council's executive meeting. Premier Li Keqiang, who presided over the meeting, highlighted the importance of venture capital development.

"Encouraging venture capital development means a lot for the country's efforts in maintaining sustainable growth and creating jobs," Li said.

"Meanwhile, China's economy still faces considerable downward pressure, yet we notice that regions that perform well in the new economy have much less pressure in ensuring employment than areas that did poorly in developing the new economy."

Over the past decade, venture capital in China has recorded annual average growth of up to 20 percent.

The new guidelines emphasize that the development of venture capital should prioritize the new economy.

Investors should apply a more professional approach based on their own features, use credit wisely and be aware of their social responsibilities.

The guidelines echo the "mass entrepreneurship and innovation" program unveiled by the premier in 2014. The government has been reinvigorating the economy by encouraging more people to start their own businesses and unleash their innovative potential.

Figures from the National Development and Reform Commission show that 2.62 million enterprises were registered in the first half of 2016, up 28.6 percent from last year. By the end of 2015, venture capital had created about 2.17 million jobs.

"Developing venture capital will contribute to our country's innovation-driven development strategy and boost private investment," Li said. "We need to encourage private investors and protect their lawful rights and enthusiasm."

Li said the development of venture capital should be guided by market demand, and a wider range of international practices should be implemented.

According to the guidelines, the country will encourage more diversified venture capital companies, including angel investors. Financing channels for venture capital investors will be expanded, and tax policies for the sector will be better developed.

"Venture capital can finance small business startups that have promising markets. Promoting the form can boost economic vitality and help create more opportunities for employment," said Huang Qunhui, director of the Institute of Industrial Economics at the Chinese Academy of Social Sciences.

The State Council also announced that China will expedite efforts to make Beijing a national scientific and technological innovation hub, so it can be a leading example of the country's innovation drive.

The focus will be to "develop fundamental research frontiers" and "cultivate global competitiveness" in sectors including smart manufacturing, biological medicine, clean energy and environmental protection.

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