China is testing a new way to channel capital into its strategic technology sector, with five private venture capital firms collectively raising 1.35 billion yuan ($188 million) through the country’s first bond issuance supported by state-backed risk-sharing mechanisms.
The initiative is a direct policy response to the chronic fundraising challenges faced by China’s private investment firms — critical players in supporting early-stage, high-tech ventures.
By offering credit enhancements and guarantees, Beijing aims to broaden access to long-term capital and accelerate its ambitions for technological self-reliance.
Five companies took part in the debut round Thursday, including Legend Capital, CAS Star, Addor Capital, Jolmo Investment Management Co. Ltd. and Oriental Fortune Capital. Their bond offerings were backed by credit-risk mitigation tools and guarantees from state-owned entities designed to minimize investor exposure.
For instance, Shenzhen-based Oriental Fortune Capital issued 10-year notes worth 400 million yuan, fully guaranteed by China Bond Insurance Co. Ltd., a state-owned credit enhancement provider, with additional counter-guarantees from the Shenzhen municipal government.
Investor response was strong. Oriental Fortune’s bonds attracted 17 institutional investors, resulting in a subscription rate of 6.3 times and a low coupon of 1.85%.
The initiative is part of Beijing’s push to deepen direct financing channels for sectors deemed vital to long-term development — including artificial intelligence, semiconductors, advanced manufacturing, quantum computing, biotech and cloud infrastructure. These industries, often asset-light and capital-intensive, have long struggled to access conventional loans.
China’s move toward market-based financing tools gained traction in early 2021 with the launch of technology innovation bonds. Momentum intensified in May when the People’s Bank of China and the China Securities Regulatory Commission expanded eligibility to include private equity and venture capital firms — marking a move toward supporting longer-term, higher-risk technology projects with patient capital.
In a May statement, Pan Gongsheng, the central bank Governor said the Sci-Tech Bond Board — a dedicated bond issuance platform for the sector — was nearing launch, with near-term offerings expected to exceed 300 billion yuan.
The new measures aim to correct a structural imbalance in China’s bond market, which has traditionally favored state-owned giants while sidelining private firms due to perceived risk and higher borrowing costs.
Recent data show early signs of success. As of June 18, issuers had floated 722 technology innovation bonds this year, spanning central state-owned enterprises, local government-backed firms, private companies and listed entities.
In the first five months of 2025, issuance surged to 756.5 billion yuan — a 76.4% jump from a year earlier. May alone saw a record-setting 363.8 billion yuan in new offerings, up 123% month-on-month. Meanwhile, average financing costs in May fell to a record low of 1.77%.
Citic Securities noted in a research report that the declining financing costs reflect participation from high-quality issuers, robust credit markets and sustained policy support.
Contact reporter Han Wei (weihan@caixin.com)
