China aims for technology innovation with financial support.
A document published by the Communist Party of China (CPC) Central Committee and the State Council on March 23 calls for a “financial push” for technology innovation, including the use of venture capitals, loans and a more lucrative incentive system for innovators.
The government will focus on ways to attract venture capital funds, according to the document. Investors in innovative activities in the seed and start-up stages, including investment by angel investors, will be granted tax preferences.
The document aims to support innovation and start-ups and further boost the venture capital market — and venture capital stocks are expected to rise.
Venture capital market gets boost
The State Council created a 40 billion yuan ($6.44 billion) capital fund in January to support start-ups, which could further attract 180 billion yuan from the private sector, to benefit nearly 10,000 start-ups, according to Xu Jianping, an official with the National Development and Reform Commission.
The venture capital market, one of the main funding sources for technology start-ups worldwide, is thus growing rapidly.
According to CV Source, a financial data platform launched by Chinaventure.com.cn, China’s venture capital market continued to grow, with 107 deals signed in January, concerning a total investment of $3.09 billion — the highest figure for the past year.
KuaiDi Dache, a mobile taxi app, raised $600 million in January from investors led by SoftBank Corp and Alibaba. Meituan.com, a group-discount website, raised $700 million, and Beibei.com, a Chinese maternal and child supplies e-commerce operator, raised $100 million.
Higher returns for innovators
The document published on March 23 also calls for a more lucrative incentive system for scientists and tech experts.
Currently, only about 10% of China’s technological innovation projects have been developed to bring to market a successful product, which can be partly attributed to a lack of incentives for innovators.
The document calls for a more equitable system of profit distribution in colleges and institutions funded by the government, and suggests that project lead researchers should receive a minimum of 50% of the profits, up from the current 20%.
Improving the proportion of earnings of researchers and their teams will encourage innovation by rewarding innovators, and it will also quicken the pace of developing innovation to bring to market a successful product in accordance with market needs, according to Chen Baoming, director of the Institute of Comprehensive Development under the Chinese Academy of Science and Technology for Development.
An institutional and legal framework, conducive to innovation-driven development, should be established by 2020, the document said.