China’s Cabinet Calls for Strengthened Support for Tech Enterprise Financing

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Source: Visual China

BEIJING, June 19 (TiPost) – The executive meeting of China’s cabinet State Council has passed an action plan to reinforce support for tech companies’ financing through improved financial products, markets and service systems in order to facilitate a sustained economic upturn.

Chinese Premier Li Qiang presided over the meeting last Friday, with the aim of exploring policy measures to create a favorable environment for economic growth. During the meeting, the attendees reviewed and approved the Action Plan to Strengthen Support for Science and Technology Enterprises’ Financing.

Financial institutions should be guided to enhance their products, markets, and service systems to cater to the diverse needs of science and technology enterprises at different stages of development, according to the consensus reached at the meeting. The goal is to provide comprehensive and tailored financial services throughout the entire life cycle of these enterprises. Priority will be given to supporting technology-based start-ups, with a focus on expediting the establishment of a financial support system primarily based on equity investment, supported by the linked stocks, loans, debt and insurance system. Efforts will be made to reinforce infrastructure development, including science and technology innovation evaluation standards, intellectual property transactions, and credit information systems. The coordination between financing support and risk prevention will be strengthened to ensure financial stability.

Regarding science and technology innovation enterprises, Yi Huiman, Chairman of the China Securities Regulatory Commission, highlighted their contributions during the 14th Lujiazui Forum held on June 8. He emphasized that the establishment of the Science and Technology Innovation Board and the pilot registration system have served as a pivotal step in improving the institutional mechanisms of the capital market to support science and technology innovation. Notably, over 70% of newly listed enterprises are science and technology enterprises with renovations, demonstrating remarkable progress in industries such as integrated circuits, biomedicine, and new energy.

Yi also underscored the commitment to implementing the innovation-driven development strategy. This involves maintaining differentiated and characteristic roles for the Science and Technology Innovation Board, the Growth Enterprise Market, and Beijing Stock Exchange. Explorations will be conducted to establish a comprehensive and complete product system encompassing stocks, bonds, and private equity. Efforts will also be made to continuously enhance the institutional mechanisms for equity incentives and employee stock ownership in listed companies. The goal is to facilitate the deep integration of the innovation chain, industry chain, capital chain, and talent chain. Timely introduction of capital market measures should also be implemented to further support policies and initiatives aimed at achieving a high level of scientific and technological self-sufficiency and advancement.

During the executive meeting, it was noted that China’s overall economic performance has picked up and improved, thanks to the introduction and implementation of policy measures. Market demand, production, and supply have gradually recovered, leading to stable prices and employment. The country is steadily advancing in terms of high-quality development. However, the external environment remains complex and challenging, with factors such as a global slowdown in trade and investment directly impacting the economic recovery process. In response to these changes, it is crucial to take more vigorous measures to enhance development momentum, optimize the economic structure, and ensure a sustained and improved economic rebound.

The meeting placed a strong emphasis on enhancing macro policy regulation and control, expanding effective demand, strengthening and optimizing the real economy, as well as preventing and resolving risks in key areas. As a result, several policy measures were proposed. It was emphasized that these policy measures should be introduced promptly and implemented as soon as possible. Additionally, there should be a reinforcement of policy measure reserves to maximize their comprehensive impact.

The meeting also considered the adoption of China’s highest-level administrative regulations for the private equity industry, known as the Regulations on the Supervision and Management of Private Investment Funds. These regulations aim to address the industry’s significant issues by strengthening source control, setting regulatory boundaries, and cracking down on illicit financial activities that exploit the “private equity” label for illegal fundraising.

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