Zhongguancun, Beijing’s Silicon Valley, promises RMB 15 billion to early-stage startups

Regional government bodies at Zhongguancun, a district in Beijing which is well-known for software innovation and R&D, aim to help introduce over RMB 15 billion ($2.2 billion) private capital to tech projects in the area by providing pilot government financial supports, Beijing Daily reports (in Chinese). By doing so, the area hopes to ensure that fundamental tech projects and early-stage startups will have sufficient material support to survive and grow.

According to an official announcement, the Zhongguancun government will help pay over RMB 100 million in loan interest for tech companies to reduce capital borrowing cost by 20%. The decision is likely to encourage over RMB 10 billion in loans to be issued in the area.

The government has also decided to inject RMB 65 million into investment institutions to hedge any risks an angel round and early-stage investment will lead to. This aims to particularly support startup enterprises with heavy tech input which yields little short-term material gain.

Beijing’s tech innovation funds, a young government-backed fund with an expected total size of over RMB 100 billion, will inject RMB1.5 billion to accelerate transformation from tech research to commercial projects. Over RMB15 billion private capital from investment groups, research institutions, and incubations is expected to follow the fund’s investment decision.

The generous financial support—apart from being one of Zhongguancun’s traditional strengths in policy backed implementations, echoes Beijing’s recent urge which calls for the improvement of private companies’ financing efficiency.

As China’s economic growth slows down and Beijing tightens regulation on lenders, the country is constantly in suspicion of a debt crisis and severe liquidity situation. Zhongguancun’s new policy, once put into implementation, is likely to easy private tech companies’ anxiety.