China's Silicon Valley becoming Internet finance breeding ground

Beijing is wooing Internet-based financial services such as online peer-to-peer lending and crowd financing to move their activities to its technological hub, promising perks from lower rents to cash rewards.

Beijing's Haidian District, which administers Zhongguancun, known as China's Silicon Valley, has carved out three plots for Internet-based financial service companies as part of its effort to lead the nation's innovation drive.

The municipal authorities hope more such firms will make Zhongguancun their home after the district announced on Saturday a raft of measures to create a business-friendly environment.

"Haidian District's support is just a beginning. The city will provide continuous support for the development of Internet finance," said Li Shixiang, deputy mayor of Beijing.

The district's supportive policies include streamlined administrative procedures to encourage online financial services to register and operate there.

These companies will qualify for rent discounts if they set up offices in the three designated areas, located either within or near Zhongguancun.

Also, companies deemed to be making outstanding contributions to the Internet-based financial services industry will receive cash rewards of up to 50 percent of their tax contribution to the district during the first three years of operation.

Haidian will also provide a risk-hedging fund up to 4 million yuan (656,000 U.S. dollars) for online lending companies that extend credit to small and medium-sized firms.

The initiative also encourages traditional financial institutions such as banks and funds to offer their services online and build R&D centers for Internet financial innovation in the district.