This paper examines the history of China’s venture capital (VC) sector from the late 1980s to the present day and draws lessons on its decades-long experimentation with creating financing channels for early-stage technology business growth. The author highlights four broad takeaways from the myriad of policies that China’s policy makers have employed.

These include:

1. the importance of labour market policies that encourage reverse migration of highly educated and experienced expatriates;
2. the observations that weak intellectual property (IP) protection may not necessarily scare potential VC funds away, especially in developing countries;
3. that government finance, when channelled appropriately and combined with selective deregulation and financial incentives, can play a positive role in helping channel capital toward promising technology firms; 
4. that open and liquid domestic capital markets are neither sufficient nor necessary for the formation of a vibrant VC sector.