Beijing, China – In a strategic move to accelerate its technological ambitions, the Chinese government has introduced an innovative, government-backed bond designed to channel massive investment into its critical tech sector. The new financial instrument uses a risk-sharing mechanism to solve persistent funding challenges for the private venture capital firms that are vital for nurturing early-stage, high-growth companies.
The initiative debuted with a successful issuance where five private venture capital firms collectively raised 1.35 billion yuan ($188 million). The first participants included prominent investment firms such as Legend Capital, CAS Star, Addor Capital, Jolmo Investment Management Co. Ltd., and Oriental Fortune Capital.
This new type of bond is structured to minimize investor risk through the use of state-backed credit enhancements and guarantees. For instance, a 400 million yuan, 10-year bond issued by Shenzhen-based Oriental Fortune Capital came with a full guarantee from the state-owned China Bond Insurance Co. Ltd., along with additional counter-guarantees from the Shenzhen municipal government.
The market has responded with significant enthusiasm, signaling strong investor confidence in the new model. Oriental Fortune’s bond offering was met with high demand, attracting 17 institutional investors and resulting in a subscription rate 6.3 times the available amount. This allowed the bond to be priced with a remarkably low coupon rate of 1.85%.
The bond launch is a key component of Beijing’s larger strategy to establish more direct financing channels for industries deemed essential for its long-term development. These priority fields include artificial intelligence, semiconductors, advanced manufacturing, quantum computing, biotechnology, and cloud infrastructure. Historically, these sectors have struggled to obtain traditional loans because they are often capital-intensive but lack significant physical assets.
To streamline the process, a dedicated platform named the “Sci-tech Bond Board” has been created and is expected to facilitate over 300 billion yuan in offerings in the near term. This program expands upon the technology innovation bonds first introduced in early 2021. In May, the People’s Bank of China and the China Securities Regulatory Commission widened eligibility to include private equity and venture capital firms.
The government’s objective is to correct a structural imbalance in China’s bond market, which has traditionally been dominated by large, state-owned enterprises. The policy is already showing signs of success, with the issuance of technology innovation bonds reaching 756.5 billion yuan in the first five months of 2025—a 76.4% increase from the previous year.
This strategic financial effort underscores China’s commitment to cultivating “new quality productive forces” and achieving greater technological self-reliance. To further support these critical sectors, the central bank is also expanding its lending program for technological innovation by increasing its size and lowering interest rates. A pilot program is also being launched in Shanghai to encourage the city to use these risk-sharing mechanisms to support its private equity institutions.
