China sets first nationwide rules for government investment funds

(ECNS) - Five Chinese government departments have jointly issued nationwide guidelines to standardize government investment funds, marking the first time the central government has systematically defined their allocation and strategic focus.

The move comes as Beijing seeks to ensure government-backed capital effectively supports strategic industries and technological innovation, while minimizing inefficiencies and overlapping investments at both central and local levels.

Jointly released Monday by China's top economic planner, the National Development and Reform Commission, and the Ministry of Finance, the Ministry of Science and Technology, and the Ministry of Industry and Information Technology, the measures require government investment funds to support major strategic initiatives, key industries, and sectors where the market cannot efficiently allocate resources.

They also call for prioritizing early-stage, small-scale and long-term investments in "key and core technology."

The guidelines stress adherence to national plans and approved industrial catalogs. Investments in restricted, phased-out, or otherwise prohibited sectors are explicitly barred. Provincial development and reform departments are tasked with creating local priority investment lists to guide the deployment of funds.

An NDRC spokesperson noted that in recent years, some government funds have faced issues such as mismatched regional focus, unclear objectives, and overlapping investment targets. The new rules aim to clarify the function and focus of both national and local funds.

National-level funds are to focus on building China's modern industrial system and advancing critical core technologies, while local funds are expected to align investments with regional industrial strengths and development priorities.

The NDRC has issued additional guidelines to better evaluate the investment direction of government funds, combining "quantitative and qualitative methods" and integrating positive guidance with restrictions, aiming to strengthen policy direction and regulatory oversight.

(By Zhang Jiahao)