The Chinese government is setting up a RMB40 billion ($6.5 billion; €5.6 billion) venture capital fund to promote innovation and support the private sector in China, according to a statement.
“The establishment of the state venture capital investment guidance fund, with the focus to support fledging start-ups in emerging industries, is a significant step for the combination of technology and the market, innovations and manufacturing,” China's State Council, the cabinet, said in a statement.
“It will also help breed and foster sunrise industries for the future and promote [China's] economy to evolve towards the medium and high ends,” it added.
It is unclear when the fund will be launched or whether any external capital will be raised.
Technology investments in China are becoming increasingly popular as the country’s internet boom has seen firms like Alibaba Group gain global recognition.
Alibaba’s Jack Ma has joined the swathe of venture capital investors trying to tap the early-stage and growth opportunities in China, with the value of venture capital funds being raised steadily increases in the country.
Firms raised a total of $4.27 billion for China’s venture industry in the first half of 2014 – 360 percent more year-on-year. Just $930 million was raised by venture capital firms during the same period in 2013, Dow Jones VentureSource data showed.
Large funds raised last year include IDG Capital Partners' China Venture Capital IV, which was the largest fund raised in the second quarter of 2014, garnering $586 million in commitments and accounting for 19 percent of the total amount for the quarter.
Ma’s Yunfeng Capital Management also raised a $500 million early-stage and venture capital fund last year, while Legend Capital, Matrix Management and Shunwei China Internet Fund all also raised upwards of $315 million during the second quarter of the year, helping boost fundraising totals to the highest level in a single quarter since Q4 2011.