China sets up USD 30 bn fund to upgrade state-owned firms

China today launched a USD 30 billion venture capital fund to support innovation and upgrading in state firms as part of its attempts to rejig the slowing economy by cutting down excessive emphasis on manufacturing and promote high-tech industries.
The fund, approved by the central cabinet is financed by China Construction Bank Corporation, China Reform Holdings Corporation Ltd (CRHC), the Postal Savings Bank of China and Shenzhen Investment Holding Co Ltd, according to a statement issued by state-owned Assets Supervision and Administration Commission (SASAC), the official Xinhua news agency reported.
The fund has an initial capital of 100 billion yuan (USD 15 billion), 34 billion of which came from the state-owned CRHC, the fund's main sponsor and controlling shareholder.

The CRHC was chosen by the government as a pilot state capital operating firm in February amid China's reforms to improve the efficiency of state firms and move them up the value chain.
The fund will serve the development of centrally- administered state companies by investing in technology and upgrades, Meng Jianmin, vice chairman of the SASAC said.
Investment will focus on forward-looking, strategic and fundamental industries, he said.

China has more than 150,000 state-owned firms, with over 100 under central government control. They play a significant role in the economy but have seen their profits decline as the economy slows.

China's economy last year slipped to 6.9 per cent with projections of further slowdown in the next two years.
Combined profits of non-financial state firms in China dropped 8.5 per cent year-on-year to 1.13 trillion yuan in the first six months of 2016.
Those under central government control saw profits fall 9 per cent.
Policymakers are promoting an overhaul on state firms, piloting mixed ownership programs, encouraging mergers and acquisitions, and downsizing overstaffed companies to cut down over capacity specially in industries like coal and steel.