China threw down the gauntlet to U.S. tech today when it launched three venture capital funds aimed at boosting domestic power and grabbing global leadership.
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‘Hard Technology’ Investments
Broadcaster CCTV reported that the government had created the funds, each with over $7.14 billion, to invest in so-called ‘hard technology’ areas. This includes firms focused on integrated circuits, quantum technology, biomedicine, brain-computer interfaces, aerospace and other key hard technologies.
The National Venture Capital Guidance fund is part of the government’s efforts to mobilize more patient capital for innovative and future industries.
The funds will primarily invest in early-stage startups and the targets should be valued at less than $75 million. No single investment will amount to more than $7 million.
Investment decisions will follow the principle of “investing early, investing small, investing long-term and investing in hard technology,” a National Development and Reform Commission official explained, adding that at least 70% of the fund’s capital will be directed to seed-stage and early-stage enterprises.
“The growth of innovation-driven enterprises is a long-distance marathon that requires patient capital,” said Bai Jingyu, an NDRC official.
Guo Fangming, an MOF official, said the fund will act as a risk-sharing mechanism, effectively serving as an “angel investor” by absorbing early-stage risks and encouraging broader social participation in innovation financing.
China Keeps Marching
2025 has been a crucial year for Chinese technology with huge breakthroughs by companies in a range of sectors. Startup DeepSeek rocked U.S. markets at the start of the year with a cheaper but just as effective AI model compared with U.S. rivals. EV makers such as BYD (BYDDY) are continuing to make strides both at home and abroad, eating into Tesla’s (TSLA) market share with Huawei challenging Apple (AAPL) in smartphone capabilities and sales.
These companies have been encouraged to grow by the government and President Xi, who wants to take on the U.S., in fields such as AI and semiconductor manufacturing. That is to get an economic and political edge over the States in times of trade war tensions with President Trump and disputes over geopolitics from Ukraine to Taiwan.
As such, after a number of years where he favored state-backed firms over private enterprises, backing for entrepreneurs and innovators is back on the cards.
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