China nurturing start-ups with cash incentives to boost economy

China is spending heavily to nurture start-up companies, as the central government hopes that the surge of money supporting private entrepreneurs can help to generate new growth opportunities for the slowing economy.

The country now runs at least 1,500 incubators under the Ministry of Science and Technology’s 27-year-old Torch Programme, a nationwide initiative that provides policy, financing and consulting services for hi-tech firms. Beijing is growing that number by 15 per cent every year, according to the ministry, which also runs an innovation fund that has channelled 3.45 billion yuan (HK$4.36 billion) of investment into more than 3,000 projects in emerging industries.

The government’s investment in young companies is part of a larger push to reduce the country’s reliance on fixed-asset investment and develop an innovation-driven economy. Chinese Premier Li Keqiang has said he hoped that the administrative and market reforms would “mobilise the innovation capacity and creativity” of the country’s 800 to 900 million workers.

The high-profile success of Chinese e-commerce giant Alibaba and a number of online companies has also helped to fuel a start-up rush. Compared with Americans and Europeans, a Chinese national is now twice as likely to engage in entrepreneurship to make ends meet, according to Max von Zedtwitz, director of the Centre for Global R&D and Innovation, a research institute with a focus on studying innovation in China.

Last year, almost 80,000 companies received services from government-run incubators, according to the ministry. They are in strategic emerging industries that include energy-saving and environmental protection, next-generation information technology, bio-technology, advanced equipment manufacturing, new energy, new materials and new-energy vehicles.

“China is now experienced in incubation programmes,” von Zedtwitz says.