Edited by Anthony Bartzokas and Sunil Mani
Chapter 7: Financial systems, investment in innovation, and venture capital: the case of China
Steven White, Jian Gao and Wei Zhang INTRODUCTION The Chinese government has always seen science and technology as essential in supporting its ambitions for national security and, more recently, economic development. Venture capital in the Chinese context, therefore, has been promoted not as a means to private gain, but as a critical mechanism for linking scientiﬁc and technological capabilities and outputs, on the one hand, with national and regional economic and social development, on the other. No longer, however, do policy makers or analysts ask the naïve question of whether China’s venture capital industry will follow the ‘Silicon Valley model’, that of some other country or region, or develop into a distinctive ‘Chinese’ model. Although still developing, China’s venture capital industry is clearly an outcome of its particular combination of political, economic and social institutions1 and the nature of the broader changes it has been undergoing during its transition from central planning to a more market-based business system. China’s venture capital industry, including the total set of related actors and institutions, has undergone a dramatic transformation over the last two decades. Because of its starting conditions – in particular, its legacy of ineﬃcient central planning and socialist ideology – the results of this transformation seem particularly striking. The system that has emerged so far is highly complex in terms of the variety and number of organizational actors, as well the multiple dimensions on which these actors are linked (Figure 7.1). This complexity is increased because all of the organizational...
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