China technology funding hits record high on boom in semiconductors, health care amid tech war, Covid-19
- Start-ups involved in semiconductors, the core components that are in short supply globally, raised US$22.5 billion last year across 501 deals in China
- The education technology sector, which enjoyed a boom when Covid-19 lockdowns popularised remote schooling in 2020, raised only US$3.3 billion in 2021
Funding for Chinese start-ups hit a record high last year, boosted by investments in semiconductors and health care amid a tech war and ongoing Covid-19 restrictions, while the internet and video gaming sectors fell out of favour after Beijing’s harsh regulatory crackdown.
Total funding for private sector firms in the “new economy” – a term that covers 21 sectors mostly in hi-tech and the internet – totalled 1.89 trillion yuan (US$296 billion) in 2021, up 6.6 per cent from the year before, according to Beijing-based market researcher ITjuzi.
Geopolitical tensions between Beijing and Washington over the past two years, which has seen dozens of Chinese companies restricted from doing business with American tech suppliers, has given China the urgency to cultivate self-made chip makers.
Funding for semiconductor start-ups was relatively modest before 2020, with total investments of 42.1 billion yuan and 45.7 billion yuan in 2019 and 2018, respectively, ITjuzi data showed.
Health care was another industry that saw strong growth in funding, up 27 per cent year on year to 330.9 billion yuan in 2021.
“Most of the capital went to hard tech such as health care and semiconductors”, said Liu Xiaoqing, an analyst at ITjuzi.