State VC fund primed to back future sectors

China launched a State-backed venture capital guidance fund on Friday to steer long-term investment into strategic emerging and future industries, underscoring efforts by policymakers to cultivate new quality productive forces as a core driver of economic growth.

The national venture capital guidance fund, jointly initiated by the National Development and Reform Commission and the Ministry of Finance, is designed to leverage central government capital to crowd in social and private investment, with a particular focus on early-stage, high-tech innovation.

At the national level, the fund is capitalized with 100 billion yuan ($14 billion) from the central government, while regional and sub-fund layers are structured to attract participation from local governments, State-owned enterprises, financial institutions and private investors.

"The development of venture capital investment has become an important engine for nurturing technological innovation and fostering new quality productive forces," Huo Fupeng, director of the NDRC's innovation-driven development center and chairman of the National Venture Capital Guidance Fund Co Ltd, said at a news conference held after the launch ceremony in Beijing on Friday.

Three regional venture capital guidance funds covering the Beijing-Tianjin-Hebei region, the Yangtze River Delta region and the Guangdong-Hong Kong-Macao Greater Bay Area have already completed business registration, Huo said, adding that the three regional funds are expected to exceed 50 billion yuan in total size.

"The regional funds are a key vehicle for translating national strategic intent into concrete investment," he said, adding that they serve as the main platform for scaling up capital and ensuring efficient fund operations.

At the launch ceremony, the three regional funds signed investment intents with 49 sub-funds and 27 direct investment projects, spanning sectors including integrated circuits, quantum technology, biomedicine, brain-computer interfaces and aerospace.

Huo said a batch of investments is expected to be completed in the near term. Looking ahead, the fund aims to establish more than 600 sub-funds across the three regions to support emerging and future industries, he added.

Emphasizing early-stage, long-term and "hard tech" investment, Huo said the national guidance fund is designed to address structural bottlenecks in China's venture capital market, including fundraising and exit constraints, by providing patient capital and clearer policy signals.

"By fully funding the guidance fund at the national level, the central government is making an important move to develop venture capital and stabilize market expectations," he said.

At the sub-fund level, no regional fund will act as the largest investor, reinforcing its policy-guidance role. Sub-funds will operate commercially, with at least 70 percent of their capital invested in seed-stage and early-stage companies, and an average fund size capped at 1 billion yuan to ensure a focus on smaller enterprises.

According to the Recommendations of the Central Committee of the Communist Party of China for Formulating the 15th Five-Year Plan for National Economic and Social Development, China should develop venture capital investment, and establish mechanisms to increase funding and share risks in future industries.

"The national guidance fund will bring together capital from local governments, centrally administered State-owned enterprises, financial institutions and private investors to form an investment ecosystem worth trillions of yuan," said Bai Jingyu, director of the NDRC's Department of Innovation and High-Tech Development.

He added that the fund will support strategic emerging and future industries through investments in funds, companies and projects, which will help accelerate the development of new quality productive forces.

Guo Fangming, director of the Ministry of Finance's department of economic construction, said the fund represents a key tool for improving the efficiency of fiscal spending and strengthening support for innovation.

ouyangshijia@chinadaily.com.cn