By CHEN Chunyou

Overseas institutions are being encouraged to increase investment in Chinese sci-tech enterprises, following a document jointly released in April by the Ministry of Commerce (MOFCOM), the Ministry of Science and Technology and eight other departments.

The document proposes 16 measures designed to optimize management services, bolster financial support, strengthen exchanges and cooperation and refine exit mechanisms.

This policy was implemented against the backdrop of domestic sci-tech enterprises facing broad development opportunities and having growing demand for diversified financing channels, while foreign institutional investors expect greater stability and convenience in operating businesses in China, according to MOFCOM.

According to the document, related departments will work to efficiently approve the applications for the dollar-denominated qualified foreign institutional investor (QFII) scheme and its yuan-denominated sibling, in accordance with the law.

Eligible overseas institutions are encouraged to issue yuan-denominated bonds, commonly known as panda bonds, to invest in the sci-tech sector, especially in promoting the commercialization of research results, while pilot projects facilitating cross-border financing will be expanded nationwide.

Parent funds, or specialized sub-funds, will be set up in such fields as new-generation information technology, AI, quantum technology, biotechnology, new energy, future energy, aviation and aerospace equipment, electric power equipment, new materials, and core basic parts and components.

Issuing bonds, especially credit bonds, is an important means for sci-tech enterprises to alleviate their financing challenges. According to a handout released by MOFCOM, the yuan-denominated bonds issued by foreign financial institutions in China reached 154.5 billion RMB in 2023, an increase of 82 percent year-on-year.

Sci-tech enterprises that have received investment from foreign institutions are encouraged to deepen industrial chain cooperation with relevant countries, said the document.

In order to provide viable exit channels for overseas investors, related departments have proposed options, including overseas listings, mergers and acquisitions, as well as share transfers.