Investment fund to aid startups
China will set up a 40 billion yuan ($6.45 billion) investment fund to support startups in emerging industries, part of government efforts to nurture new growth engines amid the slowest economic expansion in almost 25 years.
The funding will come mostly from the government, which will combine existing funds for infrastructure construction and emerging industries, though large companies and financial institutions will also contribute, the executive meeting of the State Council presided over by Premier Li Keqiang decided on Wednesday.
A statement released after the meeting said fund management companies will be selected through public bidding and will be the sole decision-makers in investment. Nongovernment investors will have a priority in the distribution of dividends.
The executive meeting was the last formal State Council gathering before China releases its annual GDP figure next week, which is predicted to be around 7.3 percent, the slowest growth in a quartercentury.
The government is counting heavily on emerging industries to boost economic growth, as its heavy industry is being hit by efforts to restructure the economy and curb pollution.
The traditional heavy industrial base in the northeast ranked in the bottom five of China’s 31 provinces for GDP growth in the first three quarters of last year, as the region painstakingly transforms into a modern manufacturing center.
Tong Youhao, an official from the China Center for Promotion of Small and Medium-Sized Enterprises Development, said the government-led fund could ease the borrowing difficulties for startup companies in emerging industries and encourage more nongovernment capital to invest in the field.
“With this financial support, companies with good projects will be able to put more effort into research and development,” Tong said.
Wednesday’s meeting also decided to grant foreign investors wider access to finance, education, culture and medical care industries. Additionally, free trade in the service sector between the mainland and Hong Kong and Macao will be accelerated, the statement said.
The development of the high-end and high valueadded service industry, especially in transportation, telecommunication, and research and design, will be encouraged to strengthen competitiveness