"Long-term funds" are more stable, with more channels. Multiple reforms promote the flow of "fresh water" to technological innovation.

“Social security, pension funds, and other ‘long-term’ capital should become innovative ‘long-distance running partners.’” “More tolerance space, long-term patience, and professional incentives should be given to state-owned capital.” “Funding sources for science and technology innovation enterprises should be more diverse.” … Regarding the requirement in the draft outline of the 14th Five-Year Plan to “build a science and technology financial system compatible with technological innovation,” deputies and members have offered suggestions, hoping to further leverage the support role of the financial system for technological innovation.

The Market Calls for More ‘Long-Term’ Capital

For science and technology innovation enterprises, especially hard-tech companies, long-term financial support is an essential key to their growth and breakthrough implementation.

“Financial support plays a crucial role in helping strategic emerging industries like quantum technology cross the ‘valley of death.’ Stable long-term capital can sustain teams in continuous tackling of key technologies, and patient capital also has a strategic anchoring effect. When financial institutions are willing to accompany enterprises through more than 10 years of R&D cycles, they send a strong signal of technological credibility to the market, which helps attract upstream and downstream partners and high-end talent.” Guo Guoping, a deputy to the National People’s Congress and chief scientist at Yuan Quantum, said in an interview.

“I hope to further improve the basic system of capital markets, introduce relevant supporting policies for technological manufacturing industries, and broaden financing channels for enterprises. At the same time, we need to expand sources of capital, extend project loan terms, and provide financing support for enterprise globalization,” said Li Dongsheng, founder and chairman of TCL, from the perspective of promoting the development of technological manufacturing enterprises.

In response to the issue of insufficient ‘long-term’ capital, the draft outline of the 14th Five-Year Plan explicitly proposes “diversifying sources of medium- and long-term venture capital” and “strengthening patient capital, and improving policies supporting the entry of medium- and long-term funds into the market.”

Jin Li, vice president of the Southern University of Science and Technology and a member of the National Committee of the Chinese People’s Political Consultative Conference, pointed out that social security, pension funds, and other long-term funds are naturally ‘patient capital.’ Their entry into the market can match the long cycle needs of hard-tech R&D and optimize the structure of the capital market, guiding investment concepts from short-term arbitrage to long-term value investment. “We should weaken the assessment of short-term paper gains, focus on long-term returns and contributions to national strategies, and truly enable ‘long-term money’ to invest confidently, effectively, and well,” Jin Li said.

“The requirements of the draft outline of the 14th Five-Year Plan are highly aligned with the goal of a virtuous cycle among ‘technology-industry-capital,’ which will guide long-term capital into key areas such as technological innovation, helping to cultivate new productive forces,” said Zhang Yichen, chairman and CEO of CITIC Capital and a member of the National Committee of the Chinese People’s Political Consultative Conference. He suggested improving risk management mechanisms, standardizing investment operations, ensuring funds are allocated legally and managed transparently, balancing safety and returns.

Stimulating the Role of State-Owned Capital as a ‘Pillar’

State-owned capital has become the main force supporting early-stage technological innovation and plays an important role in helping science and technology enterprises develop. The draft outline of the 14th Five-Year Plan proposes “leveraging the role of national venture capital guiding funds and national-level M&A funds.”

Lu Weihong, deputy to the National People’s Congress and vice chairman of the Hangzhou Municipal People’s Congress Standing Committee, found through research that the entry of state-owned capital into the market is not just about ‘funds,’ but also acts as a stabilizer, a ballast, and an accelerator.

“Endorsement by state funds can quickly enhance recognition from markets, institutions, and industry chains for enterprises, solving pain points such as ‘insufficient credit and unstable valuation’ for early-stage tech startups. Meanwhile, because tech startups have long cycles, high risks, and slow returns, social capital investment willingness is relatively low. State-owned funds fill this market failure gap. In the long run, state-owned capital naturally aligns with national strategies, guiding resources toward core technologies and promoting long-term innovation paths,” Lu Weihong said.

Some deputies and members pointed out that the current support system for tech startups from state-owned capital still needs further improvement.

Tian Xuan, a distinguished professor at Peking University and a deputy to the National People’s Congress, analyzed that the current assessment mechanism for state-owned capital still has mismatches with risk tolerance, with a clear short-term performance orientation. Moreover, there are differences between state-owned and social capital in investment decision-making, profit distribution, and risk bearing, leading to insufficient guiding effects.

“We should accelerate the construction of a differentiated assessment system that conforms to the laws of tech innovation, adjust the evaluation orientation of state-owned capital, extend assessment cycles, and focus on long-term strategic value, technological breakthroughs, and industrial driving effects, reducing the weight of short-term financial indicators. Additionally, market-oriented incentive mechanisms such as co-investment and equity incentives should be strengthened,” Tian Xuan said.

Lu Weihong also suggested establishing special assessment methods for state-owned capital investing in basic research, frontier technologies, and common industrial technologies, implementing differentiated evaluations, and optimizing assessment indicators. Furthermore, a ‘negative list’ management mode could be promoted, clarifying prohibited and restricted items for tech innovation investments by state-owned capital, and granting enterprises autonomous decision-making space outside the list to leave room for innovation exploration.

Building a Diverse Science and Technology Financial System

A healthy capital cycle depends on smooth mechanisms. How to build a more diverse and scientific science and technology financial system remains a key concern for many deputies and members.

For example, regarding the bond market, the draft outline of the 14th Five-Year Plan proposes “supporting high-quality tech enterprises to go public and issue bonds, and building a high-quality ‘technology board’ in the bond market.”

Jia Wenqin, former director of the Beijing Securities Regulatory Bureau and a deputy to the National People’s Congress, stated that the capital market has unique advantages in sharing innovation risks and promoting the formation of innovative capital, and should continue to effectively expand the coverage of multi-level markets for technological innovation.

“For instance, high-yield bonds are significant in alleviating financing difficulties for small and medium-sized tech enterprises and reducing their financing risks. Rating agencies should establish a verification mechanism based on default rates to improve rating quality and further leverage market pricing functions. Exploring layered access mechanisms, allowing ‘loss-making issuance’ and simplified financial reporting for tech startups, is also recommended,” Jia Wenqin said.

To address the common concern of venture capitalists about ‘exit difficulties,’ Jin Li believes that further deepening the registration system reform, optimizing M&A and restructuring mechanisms, and smoothing the trading channels of S-funds (secondary private equity funds) will enable capital to ‘invest in and exit’ smoothly, forming a virtuous cycle and fundamentally solving the worries of private capital.

As an experienced investor, Zhang Yichen stated that, as the government work report clearly emphasizes ‘strengthening full-chain and full-lifecycle financial services for technological innovation,’ promoting integrated investment and loan linkage and insurance linkage is necessary to create synergy between bank credit and equity investment. Additionally, regulatory authorities should continuously improve policies and establish more suitable rules to make M&A funds truly a ‘living water’ for resource allocation in the capital market. (Reporters: Yuan Xiaokang, Zhang Xuan, Chen Xu, Liang Xu)