At a recent roundtable forum, eminent figures from various sectors came together to discuss a pivotal theme: "How Finance Can Empower High-Quality Industrial Development." Notable participants included distinguished professors like Zhou Wen from Fudan University and Yang Hutao from the Chinese Academy of Social Sciences, along with industry leaders such as Lu Jue, president of the Shanghai Sci-Tech Innovation Bank, Mo Zhaoxing, former dean of the GF Financial Research Institute, and Shi Pingwu, general manager of Galaxy Fund. Under the moderation of Xu Longbing, executive dean of the China Modernization Research Institute at Shanghai University of Finance and Economics, this forum aimed to explore the critical role of finance in supporting China's modernization drive.

The consensus among the attendees was clear: Finance is set to play an increasingly crucial role in China's modernization process. Emphasizing the necessity of a balanced approach, stakeholders acknowledged the need to align financial innovation with regulatory compliance. Understanding the technological composition and characteristics of new production capabilities emerged as a focal point, alongside the need to establish credit evaluation models that align with the specific requirements of China's innovative enterprises. These models would encompass aspects like business value assessment and consensus within capital markets.

Understanding Financial Innovation

The 2023 Central Financial Work Conference outlined an ambitious target for constructing a robust financial power. This goal is anchored in China's strong economic foundation and bolstered by its leading global economic, technological, and comprehensive national strengths. Among the critical elements for achieving this status are a formidable currency, a powerful central bank, robust financial institutions, an international financial center, stringent regulatory frameworks, and a skilled workforce in finance.

During the discussions, Zhou Wen pointed out the increasing attention from central authorities toward the financial system and its development. There's a clear emphasis on adhering to a distinct path tailored to China's financial progress. As financial transformation necessitates enhanced support for technological innovation and a modern industrial system, this certainly poses major challenges for both the financial framework and its professionals.

Finance innovation is seen as essential amid the evolving landscape of new production capacities. Yang Hutao articulated that typically during periods of significant transformation in production capabilities—essentially during transitional phases—new financial services must align to both inflate positive market conditions while mitigating adverse bubbles. He stressed the complexity of finding equilibrium between speculation and investment, especially in moments that sway between investment booms and financial stability; hence the need for deep understanding of the technological frameworks.

Mo Zhaoxing highlighted the importance of resolving two major relationships in finance's empowerment of high-quality development. Firstly, under prevailing stringent regulatory measures, the balance between financial innovation and compliance is essential. Secondly, a dual focus on mitigating existing risks and nurturing innovation is vital.

Moreover, Mo underscored the importance of recognizing the political and humane aspects of finance. This emphasis on societal and political nuances within finance particularly shows itself in priority frameworks like pension finance and inclusive finance, guiding future financial sector development.

Advocating for an Open Ecosystem

The Shanghai Sci-Tech Innovation Bank, recognized as China's first bank dedicated to tech innovations, has already awarded over 6,000 high-growth tech enterprises with comprehensive financial services for their entire lifecycle. Lu Jue shed light on the bank's focus on five industry sectors: life sciences, carbon-neutral technologies, digital transformation, and artificial intelligence—highlighting the necessity of proactively positioning within critical innovation points of these industry chains.

Lu also advocated for developing a credit evaluation framework tailored specifically for Chinese tech enterprises. This model should evaluate potential based on dimensions like human capital, organizational structure, commercialization capabilities, and supply chain integration. Acknowledging that different startups at varied developmental stages necessitate diverse evaluation and service approaches is crucial for fostering growth.

In addition, Lu pushed for the establishment of an open ecosystem where diverse capital market institutions collaborate harmoniously. Companies need to optimize their capital structure, achieving a scientifically-informed mix of equity and debt according to their growth stages.

Shi Pingwu reflected on Galaxy Fund's 22-year journey, asserting the role of public fund management companies as vital links between investors and the real economy. According to him, serving the real economy is an indispensable responsibility of the public fund industry, which involves managing public investments effectively towards promising strategic sectors, ensuring that capital effectively reaches operational enterprises.

He elaborated on how public funds can support listed companies, stating that part of their function lies in value discovery. There are industries that have aligned closely with the pulse of developmental trends over recent years, particularly sectors like semiconductors, new energy vehicles, photovoltaic technology, and precision medicine, which have experienced remarkable growth.

Promoting Patient Capital Development

The concept of patient capital is pivotal in the realm of long-term investment. It emphasizes nurturing and supporting enterprises, thereby playing a crucial role in restructuring industries and encouraging high-quality economic development.

Yang offered insights into the nature of patient capital, suggesting that it should have specific requirements regarding the sources of capital. Moreover, he cautioned against viewing patient capital as a rigid approach where investments are made but never exited. Instead, patient capital can involve multiple rounds and cycles of investment, allowing frequent transitions between hands.

At the core of high-quality development is innovation. Zhou Wen remarked that innovation primarily initiates from technology and is later cemented through capital. Thus, the roles of capital and finance are critical for driving innovation forward. He advocated for more effective cultivation of patient capital to better support innovations, particularly highlighting the necessity to nurture and develop new quality productivity.

Concerning patient capital, Lu emphasized its two dimensions: temporal patience and volatility patience. She made suggestions to promote patient capital development, advocating for a diversified financial system that encourages more risk-tolerant venture capital entities to engage in cutting-edge and disruptive innovations. Additionally, she called for ongoing reforms in market mechanisms and capital markets to establish a sustainable financial ecosystem.

Ultimately, Lu pointed out that constructing a sustainable and diversified tech-financial system is vital for propelling high-quality development forward.