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China Injects $1.31 Billion toward High-Tech VC Funds, NASDAQ-Like Stock Exchange
The Chinese government announced last Friday the launch of 20 venture capital funds, designed to target investments in high-tech sectors within their national economy. As outlined by China's National Development and Reform Commission (NDRC), these sectors include the medical and pharmaceutical industries, information technology, energy conservation and environmental protection, and energy production.
The initial capitalization of the 20 funds comes to $1.31 billion, with three-fourths of the total provided by private investment. The remaining one-fourth originates from a split between the Chinese central government and seven provincial governments (Beijing, Jilin, Shanghai, Anhui, Hunan, Chongqing, and Shenzhen). The funds will be managed by professional investment firms independent from the national or provincial governments, according to the NDRC.
Also last Friday, trading commenced on ChiNext, a new Chinese stock exchange modeled on the NASDAQ and its large share of technology companies. Based in Shenzhen and also known as the Growth Enterprise Market (GEM), the ChiNext initially contains 28 companies, including software developers, drug makers, and film companies. Shares can be purchased by mainland Chinese only and a limited selection of foreign institutions, according to the New York Times.
Yesterday, the World Bank announced its readjusted forecasts for China, estimating the Chinese economy will grow by 8.4 percent in 2009 and 8.7 percent in 2010. The Bank's assessment found China's $580 billion stimulus package (see the Feb. 11, 2009 issue of the Digest) has pushed this growth, with most funds going towards infrastructure-oriented government-led investment.
The New York Times featured the ChiNext's opening in its DealBook section, which can be found at: http://dealbook.blogs.nytimes.com/2009/10/30/china-opens-nasdaq-like-exchange-in-shenzhen/.
The World Bank's latest China Quarterly Update is available at: http://www.worldbank.org/china