China attracted $3.18 billion venture capital by the end of this November, up 78.9 percent from the whole year level of 2006, according to a report released Friday by Zero2IPO corporation, a leading domestic industry research institution.

Altogether 428 contracts were signed by the end of November, 104 more than the 12 months' total in 2006, said the report.

Venture capital, also known as risk capital, refers to money invested in start-up firms and small businesses that have both growth potential and the possibility of loss.

Chinese-funded institutions were active in fund raising and investment, yet foreign-funded institutions still held the dominate share, occupying 79.5 percent of the total volume of venture investment, said the report.

Beijing ranked first among Chinese cities with $1.007 billion flowing into 127 cases, followed by Shanghai, with 94 deals clinched involving $900 million, according to the report.

The report cited China as one of the most dynamic Asian venture capital markets.

"The country is preparing for setting up of a growth enterprise stock market similar to the NASDAQ to help start-up companies, which boosts robust venture capital investment," said Dr. Ou Minggang, Deputy Chief Editor of the Chinese Banker magazine.

Ou believed that venture capital investment is conducive to long-term economic development and restructuring, as more market mechanisms could be employed to fill badly needed funds for some start-ups, especially those in high-tech, energy-saving and environmental protection industries.