China has allocated 80 billion yuan (US$10.5 billion) within the next five years to prop up improvements and innovations of high-tech enterprises, the National Development and Reform Commission (NDRC) said.

Under a memorandum of understanding signed by the China Development Bank (CDB) and NDRC, the fund will be used in high-tech modernization, key projects and the development of small and medium-sized high-tech firms, the commission said in a statement posted on its Website.

The project aims to formulate efficient finance channels for the high-tech industry at China Hi-Tech Fair being held in Shenzhen.

"The government has noticed the problem and planned to reorganize the listing and other finance systems to support promising high-tech firms," Zhang Xiaoqiang, vice director of NDRC, said during a press conference last week.

NDRC, CDB and the Shenzhen Stock Exchange are working together in order to promote teamwork between high-tech ventures and the capital market. They aim to solve the financial difficulties faced by high-tech enterprises, according to the NDRC statement.

China's total revenue for the high-tech sector last year exceeded 5.3 trillion yuan. High-tech exports reached US$281.5 billion in 2006, more than four times the figure for 2002 and accounting for almost a third of China's total export volume.

Zhang predicted that high-tech revenue would exceed 6.3 trillion yuan this year and exports would grow to US$350 billion.

Despite the government's supportive policies, the industry still needs other effective investment methods, such as venture capital.

In the second quarter of this year, 121 Chinese firms won VC investment of US$694 million, a record high quarter.

(Shanghai Daily October 16, 2007)