Enhance inclusivity and adaptability, allowing patient capital to safeguard technological progress

Securities Times Reporter Wu Shaolong

Technological innovation relies on long-term capital support. How can the capital market be more inclusive and precise in supporting hard-tech companies, ensuring good technology isn’t buried and promising projects grow faster?

—Netizens of Securities Times Online

As a hub for resource allocation and an engine for innovative development, the capital market is both a “incubator” for the growth of sci-tech enterprises and a “booster” for accelerating the formation of new productive forces. How can we better irrigate the fertile soil of sci-tech innovation with more abundant capital, support key core technology breakthroughs through improved institutional arrangements, and guide more medium- and long-term funds into the tech innovation field? Making capital and technology resonate and work in the same direction has become the most discussed topic at this year’s Two Sessions.

Optimizing Institutional Supply

Enhancing the Inclusiveness and Adaptability of the Capital Market

Serving technological innovation primarily depends on institutional adaptation. Representatives and committee members believe that continuous deepening of reforms on the STAR Market and ChiNext, improving differentiated issuance, refinancing, and M&A mechanisms will allow more hard-tech companies to leverage the capital market for growth.

On March 6, CSRC Chair Wu Qing stated at the Fourth Session of the 14th National People’s Congress that the CSRC will soon introduce two new measures, one of which is to deepen reforms of the ChiNext Market. The overall reform plan is nearly finalized and will be announced once further improvements are made.

Li Dongsheng, a National People’s Congress deputy and founder of TCL, believes that R&D-intensive manufacturing companies have long development cycles and urgent needs for stable long-term support from the capital market. He suggests broadening financing channels for high-tech, asset-heavy, long-cycle advanced manufacturing industries, and easing administrative approvals for refinancing of such industries to facilitate their re-financing in the capital market, supporting new investment projects and industry mergers and acquisitions.

Tan Xuan, a deputy to the National People’s Congress and distinguished professor at Peking University, states that improving the institutional inclusiveness and adaptability of the capital market hinges on shifting evaluation systems—from a sole focus on profitability to a multi-dimensional assessment including R&D investment, technological barriers, team capabilities, and market prospects. He recommends deepening reforms of the STAR Market, ChiNext, and Beijing Stock Exchange to create a differentiated yet interconnected development pattern, enabling enterprises at different stages and of various types to find suitable financing channels.

Gathering Patient Capital

Building a Long-Term Funding Foundation for Sci-Tech Innovation

Technological innovation is a long-term endeavor requiring “daring, capable, and long-term” patient capital. Representatives and committee members suggest improving mechanisms for medium- and long-term funds to enter the market, expanding the roles of social security, insurance, and venture capital funds to provide stable financial support for tech innovation.

“Fully leverage direct financing to support emerging industries and actively introduce long-term funds that can accompany enterprises’ growth,” said He Jie, a member of the National Committee of the Chinese People’s Political Consultative Conference and vice chairman of the Central Economic Committee of the China Democratic League. He recommends optimizing tax policies for venture capital, supporting the development of VC funds that invest in original innovation and early-stage tech companies; further improving diversified exit mechanisms to promote the development of S funds and M&A markets, creating a virtuous cycle of “investment—exit—reinvestment”; guiding long-term funds into the market, and relaxing restrictions on pension funds and commercial insurance funds investing in hard-tech industries to ensure stable “water sources” for long-cycle projects.

“Capital fundamentally pursues returns; patience is not its natural trait,” Tan Xuan said. Cultivating patient capital requires not only innovation in primary market mechanisms but also coordination with secondary market financing functions to form a healthy cycle of “early and small investments—listing development—value realization—reinvestment.” He suggests optimizing policies for medium- and long-term funds entering the market, relaxing restrictions on the proportion of equities that social security and insurance institutions can hold, and establishing assessment mechanisms aligned with long-term return goals.

Streamlining the Transformation Chain

Promoting the Commercialization of Scientific and Technological Achievements

The transformation of scientific and technological achievements is the “last mile” in realizing innovation value. Representatives and committee members recommend using the capital market as a link to strengthen industry-university-research collaboration, improve mechanisms for valuation, trading, and industrialization of成果, and accelerate the formation of new productive forces from innovation.

This year, at the Two Sessions, Zhang Tianren, chairman of Tianneng Holdings Group and a National People’s Congress deputy, focused on reforming the science and technology system. He proposed expediting the revision of the “Law on Promoting the Transformation of Scientific and Technological Achievements” to ease burdens on researchers, transformation agencies, and business entities, empowering the entire chain of tech achievement conversion and safeguarding various innovation activities.

“Implement multiple measures to break through bottlenecks in the transformation of scientific and technological achievements,” He Jie suggested, including multi-dimensional approaches such as promoting regional pilot platforms, government-funded or guided shared simulation factories and laboratories to address shortcomings in achievement transformation; cultivating a group of “technology managers” with expertise in technology, market, and legal fields, and establishing qualification certification systems for these professionals to support the transformation of scientific results.

The wave of technological innovation surges forward, and capital empowerment is timely. Accelerating the cultivation of new productive forces and achieving high-level technological self-reliance and strength depend on robust support from the capital market. From institutional inclusiveness to patient capital, from achievement transformation to industrial collaboration, the suggestions from representatives and committee members target key issues and outline a clear path for the capital market to serve technological innovation.