This would be a very interesting and possibly even positive development, if the fund were intended to give new firms with compelling technologies the seed capital to bring their tech to market. That is, after all, what venture capital funds do with their money.
Unfortunately, that’s apparently not what’s intended. Reading between the lines (Jason is the master of innuendo), the money will instead be used to offset the 17% subsidy the local firms will no longer be getting from the government under WTO rules.
While it’s unclear whether $ million (if that’s how much it turns out to be) will actually offset the subsidy loss, the way it looks like the funds are going to be distributed is just a subsidy by another name.
Without getting into whether the government even belongs in the VC business (it reeks of an industrial policy), one would hope the WTO keeps a close eye on this, and indeed that once the program is announced there will be appropriate measures taken to ensure that a) the process of allocation is transparent, b) the process of allocation is in keeping with the behavior of a venture capitalist, not a government hand-out, and c) if it even begins to smell like a subsidy, that the WTO cries foul.
That said, what is really sad about all of this is that there is a screaming need in China’s semiconductor industry for real venture capitalists, because there are some incredibly bright engineers out there with very good ideas that need some cash and some hand-holding to turn their ideas into businesses.
The government would be better off creating the fund and putting it in the hands of some very smart, proven venture capitalists. The VCs, with their management expertise and their ability to choose companies with a fighting chance, could really help China’s domestic tech sector a hand up, rather than another worthless handout.