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China's State Council, the cabinet, on Wednesday approved a guideline containing a slew of policies and measures to promote the high-quality development of venture capital, so that venture capital can support technological innovation.

The favorable policies include revising regulations and boosting accessibility to the venture capital sector for foreign investors.

The regulations for the administration of foreign-backed venture capital investment enterprises will be revised, and China will allow international professional investment institutions and teams to establish yuan funds in the domestic market, thereby leveraging their investment experience and comprehensive service advantages.

Guidance should be provided to keep venture capital stable and prioritize investment in key sectors according to market-oriented and law-based principles, the State Council said.

The role of enterprises in innovation will also be emphasized, so as to provide strong support for cultivating new quality productive forces, achieving high-level self-reliance and strength in science and technology, and fostering new growth drivers and new strengths.

More efforts will be made to foster diversified venture capital entities, including fostering high-quality venture capital investment firms, supporting the development of professional venture capital investment, and making full use of government-backed venture capital investment funds.

The guideline also called for broadening of channels to attract venture capital funds, as well as supporting asset management institutions to increase investment in venture capital, expanding the scope of pilot projects for direct equity investment by financial asset management companies, and enriching the types of venture capital fund products.

Expanding the openness of venture capital investment is important for attracting foreign investment, driving technological innovations, and facilitating industrial upgrades, which will inject new momentum into the high-quality development of the Chinese economy, Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, told the Global Times.

Wang added that greater openness will also provide Chinese local venture capital firms with opportunities to explore international markets. Participating in global competition will enhance their competitiveness and enable them to better support domestic innovation.

The guideline also called for efforts in enhancing government guidance and differentiated supervision, such as establishing a mechanism for connecting venture capital with innovative entrepreneurial projects, support for small and medium-sized enterprises, favorable tax policies for venture capital enterprises, and implementing differentiated supervision in line with the characteristics of venture capital funds.

In addition, an exit mechanism for venture capital will be refined, as will the business environment.

Global Times