BEIJING: China's State Council said here Sunday that it will encourage state and local governments and their affiliates to set up venture capital (VC) firms to finance innovation-oriented start-ups.

According to new financial incentive policies aimed at stimulating nationwide scientific and technological innovation, the State Council also encourages the private sector to invest in research and development of start-up companies.

The incentive policies are targeted at creating a friendly environment for the implementation of the National Guidelines for Medium-and Long-term Science and Technology Development.

The State Council says it is considering setting up an innovation stock market for hi-tech start-ups, similar to the U.S. NASDAQ.

The securities authorities are expected to ease requirements and waiting periods of corporate applicants wanting to be listed on the stock market.

The State Council urges the State Development Bank to grant soft loans to hi-tech enterprises, the Import and Export Bank to finance hi-tech imports, and the Agricultural Development Bank to support commercialization of new agricultural technologies.

The State Council also encourages commercial banks to actively finance state hi-tech projects and forge business partnership with hi-tech start-ups.

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