China Announces Tech Innovation Fund and Consumption Initiatives
Beijing, China – With the backdrop of impressive advancements in artificial intelligence and facing mounting pressure from U.S. tech restrictions, China’s top economic officials have unveiled plans for a state-backed fund to support technological innovation and a special action plan to boost domestic consumption.
Zheng Shanjie, chairman of China’s National Development and Reform Commission, announced that the government is establishing a “state venture capital guidance fund” to focus on cutting-edge fields such as artificial intelligence, quantum technology, and hydrogen energy storage. Speaking to reporters on March 6, 2025, on the sidelines of the annual gatherings of China’s national legislature, Zheng stated that the fund is expected to attract nearly 1 trillion yuan ($138 billion) in capital over 20 years from local governments and the private sector.
Chinese leaders view high-end chips, quantum computing, robotics, and AI as crucial to driving economic growth and upgrading manufacturing capabilities.
Zheng Shanjie, chairman of China’s National Development and Reform Commission, addresses journalists at a press conference in Beijing on March 6, 2025.
Zheng struck a defiant tone at the news conference, highlighting China’s rapid development in microchips, AI large language models, and industrial and humanoid robots. “Scenes once only seen in science fiction are now becoming reality,” Zheng said. “We are steadily moving toward the global frontiers of technology and innovation.” He added, “This proves that the suppression and blockade attempt by certain forces only serve to accelerate our drive for independent innovation,” in an apparent reference to the United States.
The announcement comes after the global success of DeepSeek’s latest AI reasoning model. DeepSeek, a privately owned company, produced an AI model that nearly matched the capabilities of its rivals—including OpenAI’s GPT-4, Meta’s Llama, and Google’s Gemini—but at a fraction of the cost. The fact that DeepSeek achieved these results despite U.S. restrictions on high-power AI chips surprised many observers.
On Wednesday, Premier Li Qiang pledged to “foster emerging industries and industries of the future” in the government’s annual work report, promising to establish a mechanism to increase funding for industries such as bio-manufacturing, quantum technology, embodied AI, and 6G technology.
Boosting Consumption and Domestic Growth
As part of a strategy to enhance domestic economic growth after years prioritizing tech innovation, the Chinese government will soon unveil a “special action plan to boost consumption,” according to Zheng. China’s household consumption as a share of the country’s gross domestic product (GDP) stood at only 39% in 2023, compared with 49% for South Korea, 55% for Japan, and 68% for the United States.
To counter the impact of U.S. tariffs and boost consumption, China is also increasing its budget deficit to around 4% of gross domestic product, the highest level in decades, as announced by Premier Li. He indicated that the quota for government bond issuance would be raised by more than 25% from last year to 6.2 trillion yuan ($855 billion).
Special bonds issued by local governments will support infrastructure investment and assist the struggling housing market, and the central authorities will allocate around 300 billion yuan ($41 billion) towards consumer subsidies, including “cash-for-clunkers” trade-in programs for cars and consumer electronics.
Private Sector’s Role
Critical to the government’s success is its ability to revive confidence among China’s private entrepreneurs, who will play a key role in advancing technological innovation amid rising restrictions from the U.S. Last month, Chinese leader Xi Jinping met with the country’s top tech executives, proclaiming it was “prime time” for private enterprises “to give full play to their capabilities.”
Private businesses contribute over 60% to China’s GDP and more than 80% of employment. The Private Economy Promotion Law is due to be discussed during the ongoing “two sessions” political meetings, which would ensure companies are provided with legal support and protection, according to Yang Decai from the Private Economic Research Institute at Nanjing University. He indicated that the law “responds very promptly and effectively to some issues that the private sector is concerned about, such as property rights protection, fair competition, ” boosting the confidence of private enterprises and market expectations for the market.
