Internet fund aims to boost innovation
Initiative is of great significance for the development of the sector, say analysts
The newly-established China Internet Investment Fund is expected to foster innovation and entrepreneurship within the internet sector via a market approach, analysts said on Jan 23.
The 100 billion yuan ($14.6 billion; 9.8 billion euros; £8.7 billion) internet investment fund, co-sponsored by the Cyberspace Administration of China and the Ministry of Finance, was launched over the weekend.
Six strategic partners — including Industrial and Commercial Bank of China Co, CITIC Guoan Group Co, China Post Life Insurance Co and China’s three major telecom carriers — have funded the first 30 billion yuan.
Three state-owned banks — ICBC, China Development Bank and Agricultural Bank of China Co — will provide financial services and 150 billion yuan of credit for enterprises which have raised money from the internet investment fund.
“Based on market operations, the fund aims to cultivate and promote a new driving force in the internet sector,” says Deputy Finance Minister Yu Weiping.
Shen Meng, director of Chanson & Co, a boutique investment bank in China, says the establishment of the State-backed fund is of great significance for the development of the internet sector and the Internet Plus industry.
“It will bring new opportunities for all parts of the internet sector. “
A report published by the China Internet Network Information Center during the World Internet Conference in Wuzhen last year showed that China’s global ranking among countries with a strong internetbased industry had moved up to 25 in 2016 from 36 in 2012, with a score of 72.8 out of 100, surpassing the average of G20 economies for the first time.
Shen added that as China stepped up efforts on economic restructuring and upgrading, the government aimed to boost the development of Internet Plus by bankrolling innovative companies.
“The fund has several advantages, such as abundant money and supportive policies. However, it will take on risks for higher yields,” he adds. One analyst urges caution. “They should invest in firms and projects of real value to avoid bubbles in the innovation field,” says Li Zichuan, an analyst at Beijing-based internet consultancy Analysys.
Xiang Ligang, CEO of telecoms industry website cctime.com, says the fund also aims to better manage cyberspace.