China to Promote High-Quality Development of Government Investment Funds

On January 2, 2025, the General Office of the State Council issued the Guiding Opinions on Promoting the High-Quality Development of Government Investment Funds (the “Opinions”), specifying 25 items across eight areas, with immediate effect.

The Opinions point out that government investment funds should focus on major strategies, key areas, and weak links where the market cannot fully play its role. They should attract and drive more social capital, support the construction of a modern industrial system, and accelerate the cultivation and development of new productivity. According to the investment direction, government investment funds are mainly divided into industrial investment funds and venture capital funds.

The Opinions emphasize that government investment funds should not be established solely for investment promotion purposes. It encourages the removal of restrictions on the registration location of government investment funds and their managers. The Opinions also optimize the adjustment mechanism for the government’s contribution ratio, and encourages the reduction or elimination of the required return investment ratio. Moreover, the Opinions strictly prohibit local governments from using illegal debt financing to contribute to the fund. Local governments must not create new local government hidden debts, nor force state-owned enterprises and financial institutions to contribute to the fund or make advances.