Stunted VC market faces hurdles

The creation of a vibrant venture capital (VC) investment market would do much to help the country's new emerging technology industries grow. Yet, VC is still in its infancy in China and must confront many serious challenges in order to grow.

For one thing, China's strong focus on planned economic growth has long restrained the development of the market and left the country's VC environment relatively immature. At present, most of the funds circulating in the domestic VC market can be traced back to the government and a small handful of institutional investors, meaning that the sources of funding for young businesses and promising enterprises are still few and far between.

A lack of talent in scientific and technological disciplines is another major problem for the country's next-generation industries.

To help the VC market get off the ground, the government should encourage more investment banks to participate in funding start-ups.