Financial sector key to country's sci-tech push

China's financial industry must better facilitate innovation in science and technology, said a political adviser.

The country has in recent years taken multiple, targeted measures to facilitate bank loans and other forms of financing for high-end manufacturing, specialized and sophisticated enterprises that manufacture new and unique products, and science and technology-based small and medium-sized enterprises, said Peter Wong Tung-shun, a member of the 14th National Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body.

"Through pilot works on technology finance, many experiences that can be replicated and promoted have been accumulated, laying a good foundation for the financial industry to support sci-tech innovations," said Wong, who is also chairman of the Hong Kong and Shanghai Banking Co Ltd.

He suggested improvements to top-level design and increased government funding as well as related policy support for technological innovation and transformation.

"It is advisable to establish an interdepartmental and expert working group at the central-government level to coordinate research and design a strategic plan for national science and technology development and coordinate the further development of science and technology and the financial industry," he said.

Works should also be done to improve the effect of government policies.

For instance, the government should provide more resources and funding for science and technology development, encourage enterprises to increase investment in sci-tech innovations through tax incentives, and roll out policies to guide more private capital and overseas funds into supporting sci-tech innovations and transformation, he added.

Wong also said it is important to strengthen cooperation between financial institutions and science and technology-based enterprises.

"We should guide financial institutions to make good use of various financial tools such as venture capital, private equity investment, bonds, and insurance, to provide targeted, complete and full-life-cycle financial services for science and technology-based enterprises at different stages of development," he said.

"Different regulatory agencies should also provide policy support and regulatory tolerance for financial institutions to launch such diversified products and services."

The political adviser also said that the Guangdong-Hong Kong-Macao Greater Bay Area has huge potential for developing the distributed solar photovoltaic industry, although with some challenges with respect to investment and financing.

He suggested the country take measures, including strengthening government strategic planning, innovating business models and launching innovative green financial products, to promote the development of the solar PV industry in the region.

Financial institutions can research the effects of existing "photovoltaic loan" products in various places and launch new "photovoltaic loan" products with terms, quotas and interest rates that are better in line with the characteristics of the GBA.

Related products can consider linking loan interest rates to power generation performance, he said.

Asset securitization can also be used to convert assets with poor liquidity into tradable investment products to promote liquidity and transactions in the field of distributed photovoltaic power stations, he said.

Tang Daqian, associate director of corporates at Fitch Bohua, said that the continuous improvement of market-oriented trading mechanisms will help create a reasonable green premium for new energy electricity generation, which will encourage the green transformation of China's power sector and help meet the country's carbon reduction goals.