China will issue a regulation Tuesday to boost the development of venture capital companies, said the National Development and Reform Commission (NDRC) in Beijing Monday.

According to the regulation, investment in the promising hi-tech start-ups is especially encouraged for venture capital companies.

They will not be allowed to invest in both real estate and guarantor businesses, said the regulation. But real estate purchases for their own use is permitted.

In China, a venture capital company can invest in a small company and obtain some stock shares. When the small companies become mature later, the venture capital company will be able to sell the shares for profit.

Small companies which have already been listed can not apply for venture capital.