China’s state investment arm said to be planning US$14 billion fund to support strategic new industries
- More than 20 investors have expressed interest in putting money into China Reform Holdings’ new fund, according to China Business News
- If confirmed, the move would form the latest efforts by Chinese state-owned funds to pump money into strategically important industries
China Reform Holdings, a government arm that invests in and trades equity stakes of small state-owned companies, plans to set up a fund to channel at least 100 billion yuan (US$13.7 billion) to strategically important emerging industries in the country, according to a report by China Business News.
If confirmed, the move would mark the latest efforts by Chinese state-owned funds to pump money into areas that Beijing has deemed vital, following the establishment of initiatives such as the China National Integrated Circuit Industry Investment Fund, also known as the Big Fund, which is intended to boost the domestic chip industry.
More than 20 investors have already expressed interest in investing in China Reform’s new fund, which is expected to complete fundraising and begin operation by year-end, according to the report on Sunday. They include central-government-owned enterprises, local governments and private investors.
Efforts to boost China’s industrial power come as the US pushes restrictions to bar American funding into crucial technologies in China from artificial intelligence to semiconductors and biotechnology.
Under those rules, funding recipients cannot expand chip manufacturing capacity by more than 5 per cent in leading-edge and advanced facilities in countries of concern such as China for 10 years, or by more than 10 per cent in legacy facilities.
01:57
China condemns new US law aimed at boosting domestic semiconductor manufacturing
Over the past decades, China has been using state-level financing to shore up major industries despite the process being plagued by waste and corruption. Those efforts have become increasingly urgent as the country races to reduce reliance on foreign technology amid an intensifying rivalry with the US, especially in the chip sector, which has borne the brunt of US sanctions since 2019.
The Assets Supervision and Administration Commission of the State Council, the country’s cabinet, is currently funnelling more state funds into backing 15 emerging technology sectors, such as next-generation mobile communications, artificial intelligence, biotechnology and new materials, with the goal of increasing the overall share of investments of central government-owned enterprises in emerging technologies by 2 percentage points in 2023.
China Reform, set up in 2021 and tasked with deepening reforms in state-owned enterprises, managed nearly 860 billion yuan of assets at the end of 2022, according to the company’s official website.
