Bank of China to issue C¥100 bn in credit to scitech firms

context: In March, a plan to reform both the financial and scitech governance institutions was announced, as finance poses a significant bottleneck for the growth of domestic tech.

Insufficient access to finance is the top problem for many technology-based SMEs, says Science and Technology Daily. In 2021, guiding opinions on bank and insurance industry support for high-tech and self-reliant development were issued to strengthen the role of banks in scitech financing, recalls Ge Chunyao 葛春尧 Bank of China Corporate Finance Department general manager. He says, traditional financial institutions face major challenges in financing tech startups due to

  • inability to identify high-quality projects
  • lack of technological understanding
  • high risks

The article highlights the development of an ‘enterprise innovation credit system’ pilot launched by the TORCH Centre under MoST (Ministry of Science and Technology) in 2020 in 13 national high-tech industrial development zones. The system measures the innovation capabilities of enterprises based on 18 core quantitative indicators, says Lyu Xianzhi 吕先志 TORCH Centre CCP committee secretary.

In 2022, a total of 71,300 ‘innovation credit enterprises’ received a total of C¥117.86 bn in credit, the article notes. The system now covers 101 national high-tech industrial development zones and 32 provincial high-tech zones, while the number of enterprises is predicted to reach 150,000 this year.

The system effectively addresses problems arising from the data asymmetry of banks, Ge says, revealing that the Bank of China plans to allocate a special quota of C¥100 bn based on this model in 2023. 

The indicator list was drafted by a wide range of stakeholders, says Yu Lei 于磊 TORCH Centre Policy and coordination department head, to ensure it is multi-dimensional and captures both ‘pure’ innovation-focused, as well as investment-relevant measures. High-tech zones in different regions have expanded the set of indicators to better reflect the stages and types of local industry, the article says.

Data sharing between different departments needs to be improved to enable high-tech zones to collect all necessary data points for the indicators, says Liu Jingtao 刘景涛 Hangzhou Binjiang High-Tech Zone Industry Promotion Bureau chief.