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June 17, 2015

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Innovators to get more support

CHINESE entrepreneurs and innovative small-business owners, especially those in the online and high-tech sectors, can look forward to increased support in the form of easier financing and fewer administrative hurdles, the government said yesterday.

The market environment for startup companies will be improved by removing red tape and providing more funding channels, the State Council, China’s Cabinet, said in new guidelines that are likely to shape future policy.

The announcement came amid a wide-reaching program of economic restructuring designed to breathe new life into a stuttering economy.

Among the policies in the pipeline, the government said it is considering relaxing the criteria for companies seeking to list on ChiNext, a stock exchange for innovative and fast-growing companies in the high-tech sector. Under the current rules, firms can list only after operating profitably for three years.

Similarly, authorities are considering the launch of a new board under the Shanghai Stock Exchange for companies in strategic emerging industries, and plans to make it easier for innovative startups to raise funds through the bond market.

In the meantime, banks should increase their support for new businesses by providing targeted financial products and services, the government said.

State-owned and foreign-invested companies are also encouraged to set up angel funds for startup firms, in return for which they will be given tax breaks, it said.

“Innovation and entrepreneurship are of great importance in accelerating China’s economic restructuring and the creation of a new growth engine,” the guidelines said.

“These are the new sources of China’s economic growth and will help to build a rich, fair and strong nation,” the State Council said.

The aim of the new measures are to “stimulate people’s enthusiasm and raise their ability in innovation and entrepreneurship,” it said.

The new guidelines reflect the sentiment of the government work report delivered by Premier Li Keqiang at the National People’s Congress in March, which called for forward-thinking reforms.

As such, the government will seek to create a freer and more open market and ease the administrative restrictions on startups. It will also provide a more direct form of support by encouraging government departments across the country to source goods and services from new businesses, it said.

By definition, high-tech firms require creative and innovative thinkers, and the State Council is therefore keen to facilitate the free flow of the nation’s talent.

The government is planning to allow academics working in universities and research institutions to set up small businesses without losing their jobs.

Similarly, university students will be granted sabbaticals from their course work to allow them time to pursue their nascent business ideas.

Financial support will also be provided to foreign professionals and Chinese graduates from overseas who set up high-tech firms on the mainland, the government said, adding that such people will be given preferential treatment with regard to securing visas and residence permits.

In more general terms, the government said it is also working on plans to strengthen intellectual property protection, especially for new types of innovation, such as creative business models.


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