The central government is encouraging its downstream agencies to engage more in sponsored venture capital deals to stimulate innovation. That is not a guarantee for success, says financial expert Victor Shih in Bloomberg and might cost the tax payers a lot of money.
Also on the list was the prevention of investment bubbles and illegal fundraising, major risks in a country where mom-and-pop investors tend to dominate stock market trading and often use their smartphones to invest more than US$1 trillion in personal savings.
“It’s very ambitious,” said Victor Shih, a professor at the University of California, San Diego who focuses on Chinese politics and finance.
“But down the road there might be very serious losses, and it’s government money, so tax payers will take a loss,” he said, referring to the country’s broad ambitions for venture capital.
Are you looking for more experts on innovation? Do check out this list.