China has launched a 100 million yuan ($13.2 million) state fund to support venture capital investment in local high-technology start-ups, the Ministry of Finance said on Monday. The fund will act as an incubator for innovative companies by providing investors with risk subsidies and investment guarantees, the ministry said in a statement on its Web site (www.mof.gov.cn).
The Chinese government has been encouraging venture capital as a way of boosting technological innovation and financing for small firms, which are frequently denied access to bank loans. Many local Chinese governments have set up similar funds to spur technology development. Tianjin municipal government set up a 3 billion yuan venture capital fund last month.
Venture capital investment in Chinese firms rose 55 percent in 2006 to $1.89 billion, according to data compiled by Dow Jones/VentureOne.