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China’s National Development and Reform Commission (NDRC), the country’s top economic planner, and other government ministries jointly issued a guide for government investment funds on Monday. It marks the first-ever establishment of systematic national-level norms to guide the investment direction of government funds, according to a report by the Xinhua News Agency.
The investment guidance focuses on three major aspects — “where to invest,” “how to invest” and “who manages” by putting forward 14 policy initiatives.
According to the guide, government investment funds are required to support major national strategies, key industrial fields and weak links where market mechanisms are unable to effectively allocate funds.
The funds should promote the deep integration of scientific and technological innovation with industrial innovation, focus on cultivating emerging pillar industries, and adhere to the principle of “investing early, investing in small enterprises, investing long-term, and investing in hard-core technologies,” the guide noted.
To better guide investment directions, it is stipulated that the government funds must strictly comply with encouraged industries that are listed in major national plans and national-level industrial catalogs.
Government investment funds are banned from investing in restricted industries, obsolete industries, and other sectors explicitly prohibited by state policies, according to the guide.
It also clarifies that economic planners at the provincial level should take the lead in formulating lists of local key investment areas, and optimize the layout and investment directions of funds accordingly.
An NDRC official said that in recent years, some government funds have encountered issues during operation, such as mismatches with local resource appropriations, unclear functional positioning, and homogenization of investment directions, according to a Xinhua report. To handle these problems, the new guide stipulates the functional positioning and investment priorities for national-level funds and local funds.
The official notd that the guide clearly stipulates that national-level funds shall adopt a holistic, nationwide perspective, adhere strictly to their designated positioning, and focus on supporting the construction of the national modern industrial system and breakthroughs in key core technologies, with dedicated efforts to address industrial weaknesses and overcome critical development bottlenecks.
Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, told the Global Times on Monday that the guidelines marks a strategic shift in managing government investment funds from a broad-based to a targeted approach. This holds profound significance for improving the efficiency of fiscal fund utilization, better channeling private and social capital, and effectively serving national strategies.
The measures also ensure that government-led investment truly serves major national strategies and industrial policies, especially in the creation of new quality productive forces and driving China’s high-quality development in the coming years, analysts noted.
The NDRC also announced measures for evaluating the investment direction of government funds on Monday, which established an evaluation system comprising 13 specific indicators, thus ensuring a full-process management mechanism that integrates quantitative assessment, penetrating supervision, and incentive-constraint linkage. The measures took effect on Monday and remain valid for five years.
By the end of 2024, China had established 2,178 government guidance funds, with a total scale exceeding 12 trillion yuan ($1.72 trillion). To be precise, industry and venture capital funds numbered 2,023, accounting for over 10 trillion yuan, data from the NDRC showed.
Global Times