Suggestion for further deepening the financial reform to support independent innovation

The further reform of the financial system that supports independent innovation is a systematic project that requires not only improving the system but also accelerating financial innovation; improving not only the direct financial system but also the indirect one; not only improving financial institutions but also enriching instruments; not only playing a fundamental role in financial markets, but also actively and reasonably playing the role of government support and guidance. In general, we should focus on the following aspects:

Accelerate the improvement of the multi-level capital market system

International experience shows that the multi-level capital market is the main venue for the financing of S&T enterprises, especially for SMEs. Many small enterprises obtain funds through the venture capital market and continue to grow and develop. However, the multi-level capital market in China is not perfect and the threshold for SMEs in Shenzhen Board market is relatively high, which has seriously hampered the financing of high-tech enterprises and development of independent technological innovation. Therefore, accelerating the improvement of a multi-level capital market system and making efforts to perfect the market such as the GEM that mainly serves SMEs with innovation is an urgent need, in order to promote China’s independent innovation. Firstly, we should launch the GEM as soon as possible to clarify its clients and the listing thresholds and standards, speed up the construction of the trading system, and improve it. Secondly, hasten the development of the OTC market. At present, China has clearly piloted the transfer of shares in Zhongguancun and set up a national non-listed public company equity trading market in Tianjin Binhai New Area. We can consider accelerating its development as a nationwide OTC market under unified supervision on the basis of accelerating pilot projects. In the medium and long term, we can also gradually pilot other OTC markets in the regional economic center, according to the actual situation of regional economic development in China, and truly form a multi-level capital market system.

Accelerate the development of venture capital funds and private equity funds

In order to accelerate the development of venture capital investment, we should encourage and guide qualified areas as soon as possible to establish guiding funds and improve guiding mechanisms for venture capital investment, and at the same time, actively adopt policies and measures to create a favorable environment conducive to its development. For example, attract social and foreign capital to enter the venture capital market in China to learn the advanced and standard operation mode of foreign venture capital; establish and perfect relevant laws and regulations to strengthen supervision and promote standardized operation; improve the system of intellectual property protection through legislation and improve organizational form, management mode, and operating mechanisms; and correctly define the role of government, and make it play a reasonable role in guiding and supporting. On the other hand, we should accelerate the formulation of management measures for private equity funds and create conditions for their development. In view of prominent problems such as unclear legal status of equity investment and lack of corresponding provisions regulating equity investment enterprises and management enterprises, which are unfavorable to the development of private equity funds, it is necessary to expedite the formulation of the management methods for private equity funds, realize their transparency and legalization as soon as possible, clarify the threshold and form of organization, and strive to create conditions for their standard operation.

Encourage commercial banks to carry out specialized services for high-tech enterprises and set up technology hanks

Firstly, establish and improve the risk compensation mechanism for technology loans from commercial banks and vigorously guide them in providing differentiating and standardizing services for technological enterprises. Above all, we should promote the development of various types of loan guarantee institutions and further improve the multi-level credit guarantee system and the guarantee system for intellectual property in line with the characteristics of S&T enterprises. Also, we should support and guide financial innovation of commercial banks and the enrichment of credit instruments, such as loans with stock options and participating in profit sharing in technological enterprises. In addition, we must further enhance the support mechanism for S&T financing. While doing so, it is necessary to optimize the mechanism and methods; focus on financial services related to independent innovation such as technological guarantee institutions, technology loans, etc.; and strive to form a risk compensation mechanism so that enterprises can engage independent innovation, banks can grant loans, and government provides appropriate guarantees.

Secondly, set up specialized S&T banks or branches in existing banks in some qualified areas. The successful experience of the Silicon Valley Bank shows that the specialized banks that serve science and technology enterprises have the foundation and conditions for success. Therefore, the establishment of specialized technology banks in high-tech industrial development zones is an important part of the construction of China’s financial support system for strengthening independent innovation. According to the current development of high-tech enterprises, we can consider easing market access restrictions in Beijing, Zhongguancun, and other places to carry out pilot versions of these banks; actively guide and support existing banking financial institutions to set up branches in science and technology; and carry out professional services for high-tech enterprises.

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