How is China strengthening homegrown technology while improving investment efficiency?

China has officially launched a national venture capital fund and three large regional funds, concurrently worth billions of dollars. It is undertaken as a part of a push to enable homegrown tech champions and enhance investment efficiency.

What is the new investment plan?

According to Xinhua News Agency, the National Startup Investment Guidance Fund, as well as the three vehicles encircling the Beijing-Tianjin-Hebei region, the Yangtze River Delta and the Greater Bay Area, began operating on Friday. The national fund is supported by 100 billion yuan ($14.3 billion) from the Ministry of Finance. It is financed through the allocation of ultra-long special sovereign bonds.

“The three regional funds are set up through the national fund’s equity stakes in limited partnerships and are each anticipated to eventually rise to more than 50 billion yuan,” Huo Fupeng, chairman of the state fund, said at the same event.

China is ramping up its push for technological breakthroughs as competition with the US heats up in areas such as semiconductors. Tighter fiscal conditions, including rising debt risks and weaker revenue. They have forced the government to be more disciplined about how it invests. At the same time, the rise of AI startup DeepSeek this year indicated the effectiveness of private capital.

“Emerging and future industries are still struggling with limited investment and insufficient inputs of other innovation factors,” Bai Jingyu, an official at the National Development and Reform Commission, said at the briefing.

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'Little giants'

The NDRC first declared plans for the state fund in March, estimating it could drive 1 trillion yuan of investment from local funds and private capital. The national fund will operate for 20 years, with 10 years dedicated to investment and another 10 to exits. This will aid in supporting the long-term growth of companies and cultivate “little giants", a term used to describe smaller firms.

These firms are aligned with the government’s tech priorities, as well as unicorns across industries.

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The fund will target smaller companies with valuations of no more than 500 million yuan, and each deal will be capped at 50 million yuan.

Strategic emerging and future industries will be prioritised. The three regional funds plan to invest in sectors such as integrated circuits, quantum technology, biomedicine, brain-computer interfaces and aerospace.