China launches venture capital fund to lead the charge on tech investment

China has launched a national fund designed to channel state-backed money into early-stage bets on tech, a move officials said could ultimately steer trillions of yuan into preferred avenues of investment.

Beijing’s National Venture Capital Guidance Fund was unveiled on Friday, at a ceremony which also introduced three investment vehicles covering major cross-regional agglomerations: the Beijing-Tianjin-Hebei cluster, the Yangtze River Delta and the Guangdong-Hong Kong-Macau Greater Bay Area.

At the ceremony, an official from the Ministry of Finance said the new fund differs from earlier programmes in three ways: more fiscal backing, a sharper investment mandate and stronger capital-multiplier effects.

The fund will prioritise “investing early, investing small, investing long-term and investing in hard tech”, the official said, with an explicit focus on frontier areas such as artificial intelligence (AI), biopharma, quantum computing and 6G telecommunications networks.

To match the long research and development periods typically seen in hard tech, the fund’s investment cycles are designed to last roughly 15 to 20 years.

Structurally, the programme will have a three-tier structure, with the national guidance fund at the top above regional funds and sub-funds. It will raise money at the regional and sub-fund levels from local governments, financial institutions and enterprises, both state owned and private.

“Hundreds of billions in fiscal funding is expected to leverage trillions in broader social capital,” the finance ministry official said.

South China Morning Post