China is considering a tax incentive policy to further encourage
the booming venture capital (VC) industry, a government official
has said as the country became the second largest VC recipient in
Asia.
The National Development and Reform Commission (NDRC) and six
other ministries are jointly working on the new preferential
policy. "It will come out in less than two weeks", said NDRC
official Liu Jianjun.
It echoes the national target set early this year of developing
an innovation-based economy, said the NDRC official.
In the first eleven months of the year, venture capital of
US$1.7 billion flooded into China, 57.5 percent more than last
year, said the report released by Zero2ipo, a VC research
institute.
Information technology remains the most appealing sector,
attracting 62 percent of the total.
VC investment in the service sector rose to 9.6 percent, and the
bio-technology and medical industries also posted rapid growth,
surging from 2.3 to 7.1 percent.
More lucrative early stage ventures attracted more investment
than those at the expansion stage, the report said.
However, a lack of legal protection and the absence of
preferential tax policies saw some venture capital firms exit the
business, preferring to focus on the real estate and capital
markets.
An industry report released by NDRC said two thirds of the VC
companies have invested money in the real estate and securities
markets.
(Xinhua News Agency December 8, 2006)