China’s recently opened Nasdaq-like trading
board dedicated to tech and science companies has seen a massive amount of
investment in recent days. However, further research into the investors funding
these companies has shown that state-owned investors back much of the top
businesses on the board. Out of the top 25 companies listed on the board, 14 of
them demonstrate state-funded investment in a big way.

The board was developed to spur innovation
in China and allow for funding of useful research. Economically, the companies
were expected to aim at developing better local production methods to lower
dependence on American components and talent. With the US-China trade war in
full swing, China believes that this will offer them an edge in the bargaining
process and will help them maintain stability even if the US cuts them off
completely.

No Separation of Business and Government

While the country is seeing a
renaissance-like emergence of business, especially in the field of technology,
it can be a difficult thing to determine where business starts and the
government stops. In the world of big tech, it’s even harder, with governmental
investors and state-funding bodies putting lots of money into developing net
technology.

Tech companies in China expect government
involvement in tech investment. However, these government-controlled investors
also fund US tech startups – an action that is at the core of the trade talks
between the US and China. The US government is not comfortable having Chinese
investors funding US companies, especially since the government has a large
hand in how the companies doing the funding operate.

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The government funding presented to local
tech firms in China is becoming essential as the Chinese government cracks down
on debt within the country’s financial systems. Smaller tech companies that
relied on this source of funding through debt now have no option but to allow
government investors to fund their research. The underlying cost of that
decision remains to be seen.



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