China reforms eye more innovative bases

Chen Xinshu never expected a small workshop that started with only 17 people eight years ago would have developed into a leading manufacturer of high-tech medical instruments.

The company, called Zoncare, with an expected sales volume of 100 million yuan ( 16.4 million U.S. dollars) this year, sounds like a miracle for most small businesses in China, which usually find themselves in trouble due to lack of money.

"At first we had few fixed assets. No banks were willing to offer any loans to us," Chen, deputy manager of Zoncare, recalled.

Luckily, with the help of Optical Valley's association for credit ratings promotion, the company was later given a triple-A rating and offered a credit extension loan of 50 million yuan from a state-owned bank, according to Chen.

"It's unlikely that we would get such preferential treatment elsewhere," he said.

Wuhan Donghu New Technological Development Zone, better known as Optical Valley, is China's base for the photoelectron industry. Located in Wuhan, capital of central China's Hubei Province, the zone was approved by the State Council in 2009 as the country's second National Independent Innovative Demonstration Zone, following only Zhongguancun in Beijing.

With help from the loan, Zoncare has made a series of breakthroughs in medical instrument development, and its products are sold to more than 100 countries and regions.

Over the past 35 years of opening and reform, China has developed into the world's second-largest economy, but its resource-heavy development mode has yet to be changed. Restricted by the increasing cost of resources, energy and labor, the country has been under pressure to maintain its rapid economic development.

At the 18th National Congress in November 2012, the Communist Party of China (CPC) put forward a strategy for innovation-driven development, stressing the importance of scientific innovation in improving productivity and overall national strength.

On Sept. 30, members of the Political Bureau of the CPC Central Committee visited Zhongguancun and studied there, another sign that the country yearns for power in advanced science and technology.

Chinese president Xi Jinping, who is also general secretary of the CPC Central Committee, said on Saturday that a blueprint for comprehensive reform would be put forward at the upcoming Third Plenary Session of the 18th CPC Central Committee, scheduled for Nov. 9 to 12. Many people believe innovation development strategy will be a focus for the new round of reforms.

National innovative bases such as Zhongguancun in Beijing, Optical Valley in Wuhan, and Zhangjiang in Shanghai, are at the frontier in the drive for economic reform.

Zhongguancun is China's first high-tech park zone and the first national independent innovative demonstration zone. Over the past 20 years, nearly 20,000 high-tech enterprises, consisting of 1.56 million employees, have registered there, reaching total revenues of 2.5 trillion yuan last year. It has become a symbol for the country's high-tech development.

As in Zhongguancun and the Silicon Valley in the U.S., numerous high-tech talents from around the world gather and start their businesses in Optical Valley, which is home to more than 10 universities and 50 state-level research institutes.

Li Shiting, chief of the zone's scientific innovation bureau, said these enterprises, which represent the most advanced technology, are important engines for the country's economic reform. "We can't afford to lose them just because they are short of capital," he said.

Small and medium-sized enterprises registering in Optical Valley often have financing difficulties because of their limited fixed assets, so the zone has offered incentives of up to 20 million yuan for newly-established financial institutions in Optical Valley. If an institution is headquartered there, the subsidy will be raised to 50 million yuan.

Motivated by the preferential policies, more than 100 bank branches have been set up in Optical Valley, and they have developed more than 100 financial products for the local high-tech enterprises, such as intelligent property loans.

Chinese Premier Li Keqiang noted at the opening of the Summer Davos Forum last month that China was speeding up its implementation of a strategy of innovation-driven development, promoting technological innovation and deep integration of science and technology with the economy, and building a social environment friendly to innovation and business start-up activities.

More reforms would be made to the financial sector so that small, medium- and micro-sized enterprises could acquire loans and encourage social investment over various economic fields, he said.

Liu Min, general manager with the Hongtu Venture Capital Firm, said that apart from bank loans, high-tech enterprises in Optical Valley also need other financial services, such as equity investment and financial leasing, which is why Liu's company relocated its headquarters from Shenzhen to Wuhan in 2011 to invest in high-tech enterprises.

There are about 200 venture capital firms and investment management institutions registered in Optical Valley, bringing total capital of 18.7 billion yuan.

With the help of such capital, photoelectron, biomedicine, new energy, and quality equipment manufacturing enterprises have achieved rapid development. Last year, total revenues of the valley's enterprises surged 30 percent year on year to 500 billion yuan.

"We believe more innovative bases like Zhongguancun and Optical Valley will emerge to encourage the development of innovative enterprises," Liu said.