Promoting High-quality Development of Sci-tech Finance

To resolve the issues sci-tech finance faces and systematically assist China's modernization construction, the National Financial Regulatory Administration, the Ministry of Science and Technology and the National Development and Reform Commission have jointly released an implementation plan for high-quality development of sci-tech finance in the banking and insurance sectors.

According to the plan, a financial service system will be built to accelerate the concentration of financial resources for sci-tech innovation. This strategic initiative is a key measure to promote a virtuous cycle of science and technology, industry and finance.

The plan outlines 20 measures across seven key areas, focusing on strengthening mechanisms, product systems, professional capabilities and risk management for sci-tech financial services. It provides guidance for financial institutions to enhance full lifecycle financial services for sci-tech firms, thereby advancing the broader agenda of sci-tech finance.

A key component of the plan is a combination of multi-departmental policies designed to increase financial resource allocation. It encourages banks and insurers to invest early, small, long-term, and in hardcore technologies, thereby channeling more financial resources toward technological innovation. It also seeks to streamline the "three-capital cycle" (capital-funds-assets) by removing bottlenecks, supporting tech enterprises — especially "chain leader" firms — in accelerating industrial integration.

"Tech companies, characterized by light assets, high risks and long cycles, inherently conflict with banks' conservative operational logic, which emphasizes collateral and risk control," said Zhang Ming, deputy director of the Institute of Finance and Banking at the Chinese Academy of Social Sciences. He noted that the plan deepens supply-side structural reforms in finance for the sci-tech sector.

Accordingly, the plan calls for expanding sci-tech credit supply. It encourages banks to increase unsecured loans and medium- to long-term lending for tech firms, with flexible interest rate pricing and repayment structures. For working capital loans with extended cash flow recovery periods, banks may extend loan terms up to five years.

A highlight of the plan is the establishment of a full lifecycle service system covering the "startup-growth-maturity" stages.

Dong Ximiao, chief researcher at Merchants Union Consumer Finance Company Limited, said the plan, for the first time, systematically integrates banks, insurers, venture capital and guarantee institutions into a coordinated framework.

For instance, it requires banks to set up dedicated sci-tech finance units, insurers to develop R&D interruption insurance and first-of-its-kind major equipment insurance, and encourages innovations like "investment-loan linkage" and "intellectual property pledge financing" to create a synergistic "equity-debt-insurance-loan" effect.

Source: Science and Technology Daily