Shenzhen unveils 20-point plan to boost funding for local tech companies

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The city’s municipal government aims to develop an “innovative capital centre” and a “world-class exchange” in the southern metropolis, according to a 20-point plan issued on Sunday by the Shenzhen Financial Regulatory Administration and four other agencies.

“We are clearly aware that the financial development and support for science and technology innovation still face some pain points and difficulties that need to be resolved,” the Shenzhen municipal government said in a separate document. “As technology advances, the financial service system that is compatible with it must continue to be upgraded.”

Without providing details, the municipal government plans to start trials of “equity + debt” financing via approved banks in the Hetao Cooperation Zone and the Qianhai Cooperation Zone, which are tech- and finance-focused industrial clusters jointly established under partnerships forged between Shenzhen and Hong Kong.

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The trials will enable Shenzhen’s medium-sized and large banking institutions, along with their Hong Kong investment arms, providing financing services to tech companies in the metropolis.

The Shenzhen municipal government’s funding initiative marks the latest effort by the city, which Chinese President Xi Jinping has described as an economic model for the country, to help the domestic tech sector overcome stifling US sanctions.

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Under its tech funding plan, the Shenzhen municipal government will direct venture capital (VC) firms to make investments in so-called strategic industries, including telecommunications and semiconductors.

The city will also step up financial support for basic research and core technology projects, while expanding the scale of bond issuance by eligible companies and encouraging insurance firms to launch plans specifically for tech firms.

Under its 20-point plan, Shenzhen will also make credit-reference data accessible to the financial industry and explore an exchange mechanism of credit information between the city and Hong Kong.

Funding for VC firms that invest in China evaporated rapidly in the second quarter, as investors grew increasingly hesitant about betting on a country struggling with overhanging economic woes and geopolitical tensions with the US. China-focused VC funds raised US$2.7 billion from April to June, down 54.2 per cent from the previous quarter, according to a report in August by research firm Preqin.

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