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Full transcript of the State Council policy briefing on Feb 5, 2016

Updated: Feb 5,2016 6:48 PM     english.gov.cn

Hu Kaihong (host):

Good morning ladies and gentlemen. Welcome to the policy briefing. Today we are glad to have with us Yin Hejun, vice-minister of science and technology, who will introduce policies to promote makerspaces and mass innovation. We also have with us Zhao Gang, head of the Department for Regulation of the Private Economy under the State Administration for Industry and Commerce, and Shen Zhulin, an official of the Department of High-Tech Industry under the National Development and Reform Commission.

First let’s welcome Mr Yin to speak.

Yin Hejun:

Good morning. Promoting mass entrepreneurship and innovation is a major step for implementing the strategy of innovation-driven development. It’s also an effective measure to cope with the latest round of technology revolution and change of industries.

The CPC Central Committee and the State Council attach great importance to entrepreneurship and innovation. The State Council has issued a series of policies to promote mass entrepreneurship and innovation since last year, encouraging people around the country to join the cause.

The Ministry of Science and Technology is implementing the requirement by the CPC Central Committee and the State Council by making the cause of mass entrepreneurship and innovation an important pillar for the strategy of innovation-driven development, and by letting technological innovation play a leading role in the cause.

There have emerged a number of makerspaces in the country that have potential and their own characteristics. They have become important gathering places for people who aspire to innovation and starting their own businesses. These makerspaces are developing well and playing an important role in keeping stable and fast economic growth.

The Fifth Plenary Session of the 18th CPC Central Committee brought forth conceptions for development featuring innovation, coordination, greenness, openness and sharing.

The session requested the country to understand, adapt to and lead the new normal, and speed up the transition of economic drivers.

In order to achieve this goal, we should create a better environment for mass entrepreneurship and innovation, and encourage better innovation and businesses, thus unleash new demand, create new supply, and speed up the development of new technology and new industries.

Yin Hejun:

As a result, the Ministry of Science and Technology will invest efforts in two fields to speed up the development of makerspaces.

First, we will encourage makerspaces to offer better services for the real economy and economic transformation and upgrade. We will focus on transforming more technology research outcomes into real benefit to businesses and industries, and make science and technology researchers the main force of entrepreneurship and innovation.

We will encourage key companies to reform their research and development, production, sales, service and management, and nurture more medium and small enterprises that are vigorous.

Second, we will improve the makerspaces’ ability to serve mass entrepreneurship and innovation. We will encourage them to offer services including design, test and making of models. We will encourage them to offer more customized and specialized service to meet the need of different business starters and improve their skills.

This is the end of my introduction. You are welcome to ask questions.

Hu Kaihong:

Thank you. Mr Yin. Now the floor is open.

China Radio International:

I have a question for Mr Yin. The State Council executive meeting examined mass innovation and entrepreneurship on a number of occasions. Is there any new information from this week’s meeting? Are there new policies and measures to help the development of the real economy.

Yin Hejun:

The State Council attached great importance to mass entrepreneurship and innovation and produced a series of measures, including developing makerspaces. Recently, Premier Li Keqiang issued several important instructions to produce more measures to support mass entrepreneurship and innovation by summing up experiences both at home and abroad. He also called for the implementation of makerspace policies and optimization of environment for entrepreneurship and innovation, thus turning entrepreneurship and innovation into new engines to drive economic growth, industrial upgrading as well as employment. The State Council took further action for the development of makerspaces, aimed at promoting the professional development of makerspaces, offering all-around, low-cost and professional services for mass entrepreneurship and innovation, further unleashing society’s vigor for entrepreneurship and innovation, speeding up the transformation technology research outcomes into real benefits for businesses and industries. Through the joint efforts of leading enterprises, medium, small and micro-sized enterprises, scientific research institutes, universities and makers, we are going to create makerspaces specializing in production, learning and research, and attract more scientific staff to engage in technological entrepreneurship and innovation, which in turn will help realize the highly efficient allocation of talent, technology and capital and strengthen the new economic momentum and cultivate the new economic driving force.

As for policy support, it is to make full use of the current policy tools to dig out the potential and carry out the detailed policies to form a policy system for the development of makerspaces. Purposes of the policy system can be classified into two categories: one is to lower the construction and operation costs of makerspaces, and increase their enthusiasm, which can be done through two methods. One is to give preferential treatment, and encourage the enterprises, universities and scientific research institutes, to increase their equipment and facilities investment in makerspaces. The other method is to increase the enthusiasm of enterprises, universities and scientific research institutes by giving tax preference to tech companies, perfect the performance assessment standards of State-owned enterprises and give subsidies for the purchase of hardware and software. The other category is to give accurate support for the entrepreneurs in the makerspaces, such as providing support for the excellent entrepreneurship team and national key projects, giving tax preference for research funds, keeping the personnel relations of the tech talents that work in the makerspace and exploring the allocation method of the innovation results. Thank you!

China News Service:

A lot of policies have been issued with regards to mass entrepreneurship and innovation last year. In the eyes of National Development and Reform Commission (NDRC), what kinds of social responses and policy effects have been achieved? What are the future plans that the government will take to support the mass entrepreneurship and innovation? Thank you.

Shen Zhulin:

On behalf of NDRC, I’d like to express my great gratitude that so many media friends are concerned about the mass entrepreneurship and innovation. The initiative was first launched in 2015. During the year, the State Council has issued a series of policies with the support of different government departments and local governments. So far, many good measures have taken roots and achieved good results. Judging from the current situation, the policy environment in 2015 has been greatly optimized with the surging of innovations and business startups in our society, which made a very good start for mass entrepreneurship and innovation.

I’d like to look at the policy effects from the following five aspects. First, people’s passion for innovation and entrepreneurship has been fully unleashed. Innovation plays a crucial role in stabilizing economic growth and creating job opportunities. According to the latest statistics issued by the State Administration of Industry and Commerce (SAIC) not long ago, the year 2015 witnessed the surge of a large number of new market players, about 12,000 of them coming into being each day. These new market players will inject exuberant vitality to our economic development. The mass entrepreneurship also promotes job growths. For example, starting business has become an important channel for college students to solve the employment problem. The number of self-employed university graduate increased in 2015 and rose by 6.8 percent compared to 2014. Besides, graduates returning from abroad and migrant workers are also joining mass entrepreneurship and innovation. Many migrant workers started their own business after returning to their hometown. According to the preliminary estimate, about 2.4 million migrant workers established their own business. Therefore, to say that mass entrepreneurship and innovation is the new engine for economic development is not empty words, it indeed has achieved good results.

Second, China aims to further promote new technology, new products and new business models through mass entrepreneurship and innovation, enabling them to play a significant role in the new sectors. The number of our patent applications rose more than 20 percent year-on-year in 2015, while patent licensing jumped 61.9 percent. Such figures are staggering.

Entrepreneurship and innovation also highlights development with high-precision, as its growing momentum shows a huge advance in sales and profits compared to old industries. According to latest statistics, it should account for 8 percent of the GDP, which means we have smoothly fulfilled the target for the “12th Five Year Plan”.

Third, venture investment, a barometer of mass entrepreneurship and innovation, witnessed a dramatic growth last year. Latest data showed that funds that used in domestic investment raised through venture investment rose more than 80 percent in 2015, with double investment cases. Angel investment also saw a faster growth. Credit support increased significantly. Outstanding loan of small and micro businesses reached 23.46 trillion yuan, accounting for 23.9 percent of all loan balance. Venture investment showed diversified channels. The money raised through “new three board” totaled 121.62 billion yuan, jumping 821 percent year on year. More than 30 innovation enterprises raised over 20 billion yuan through issuing bonds and assets backed security (ABS).

Fourth, the platforms for innovation and entrepreneurship flourish everywhere and the entrepreneurship service system improves gradually. As of the end of 2015, incubators of various types of technology business amounted to over 2,500 companies. Over 4,000 new bases for the innovation and entrepreneurship of small companies were cultivated and identified. The number of entrepreneurship mentor totaled 13,000, providing counseling services to 34,000 companies. The public service platform for small- and medium-sized enterprises organized 158,400 events, serving 1.84 million companies.

Fifth, last year, we organized various events to promote mass entrepreneurship and innovation, triggering nationwide enthusiasm for entrepreneurship and innovation. In October, we hosted the first mass entrepreneurship and innovation week. And Premier Li Keqiang attended the event to show support for the entrepreneurs. Other State Council leaders were also at the event to give their instructions. Many other activities, including an entrepreneurship and innovation contest, also had an impact on the whole society. And with media support, entrepreneurship and innovation was a hot topic of reports.

In a nutshell, 2015, the launch year of mass entrepreneurship and innovation, saw great success. But currently we can see that there are many problems, especially in the implementation of some policies. The problem of the “last kilometer” still exists. Many entrepreneurs still do not know much about the country’s policies and there are still many tough issues concerning entrepreneurship and innovation. We will continue to make efforts in this aspect and jointly work with the mass entrepreneurship and innovation ministerial coordination conference to improve the environment, sum up good practices and experiences and speed up the establishment of an entrepreneurship and innovation platform, including makerspaces, in order to gather innovative talent and continue to burn the fire of mass entrepreneurship and innovation. We hope our friends in the media will pay more attention to entrepreneurship and innovation because it needs not only investment and platform but also a sound social environment, which depends on the support of the media. Thank you.

China Daily:

Media report said that with China’s mass entrepreneurship and innovation strategy, the gap between the country and the United States in the venture capital sector is narrowing; what is the view of the National Development and Reform Commission? Thank you!

Shen Zhulin:

I just said that 2015 was the year of boosted entrepreneurship investment, and I also disclosed some data. It should be noted that the investment environment for entrepreneurship was optimized last year, with the scale also expanding. Withdrawal methods of the investment for entrepreneurship and fund-raising channels were also diversified in 2015, and the general development trend was very strong. Based on the numbers I mentioned just now, I will share some data with you now. In the past year, domestic venture capital organizations launched 721 new venture capital funds, the newly added capital available to invest was 220 billion yuan, an 80 percent year-on-year increase. In comparison, China’s fixed-asset investment increased only 10 percent last year. At the same time, 5,520 investments were made, double the number from the previous year. Of the more than 5,000 investments, 2,075 were angel investments, which are also middle and long-term investments. Those investments saw an increase of 170 percent. These numbers were very attractive. The development of venture capital is connected to the optimized policy support and the improved market environment. And there are four reasons for such a good investment situation:

The first is due to the improved environment for entrepreneurship and innovation. In the past year, the CPC Central Committee and the State Council have created many opportunities for mass entrepreneurship and innovation. They brought many people into entrepreneurship and innovation, boosting increased entrepreneurship investment in China.

Shen Zhulin:

Second, due to the continuous improvement of investment policies for entrepreneurship. A series of government documents last year highlighted entrepreneurship investment as an important approach to advance mass entrepreneurship and innovation, such as the State Council documents on implementing the strategy of innovation-driven development and on promoting mass entrepreneurship and innovation. Various departments made robust measures centered on these documents. We lifted restrictions on insurance capital to flow into entrepreneurship investment; we expanded the policy scope of tax credits for investment in business startups; we simplified procedures for State-owned venture capital companies to exempt the transfer of State-owned shares. Through such optimization, we have built a favorable environment for development.

Third, due to the establishment of venture capital guidance funds by the government. Last year, the State Council approved the venture capital guidance funds for emerging enterprises and development funds for small and medium-sized enterprises, along with a volume of 100 billion yuan. Led by the central government, local governments also acted to set up local funds. These guidance funds, in terms of both quantity and volume, have effectively increased the capital supply for our pursuit of entrepreneurship investment.

Last, due to the increasingly diversified exit channels in the capital market. Over the years, people might have noticed that we have been improving the capital market with new reform measures. Through years of work, we have made some progress. Last year, the Shanghai Stock Exchange and the Shenzhen Stock Exchange provided strong support for entrepreneurship investment to exit through IPO. Last year, there were 263 cases of exiting the trade through IPO and another 286 cases through merger and acquisition, a situation we have long dreamed of. Meanwhile, the amount of financing on the new tertiary board increased by 800 percent, making the new tertiary board a main channel for capital exit.

Shen Zhulin

With improvements in the policy environment, especially in the transaction system of the three new boards, we will further enrich the channels for entrepreneurship investment and create a better development space for startup businesses. Friends from the media have mentioned that we are narrowing the gap with the United States in entrepreneurship investments. And the reason is that China is now the world’s second largest in terms of entrepreneurship investment volume. Although the entrepreneurship investment is increasing very rapidly, we still lag far behind the U.S. in terms of the number of excellent investment management groups, entrepreneurship investment service capacities and investment volume. Therefore we will continue to expand our entrepreneurship investment volume and improve the investment environment for startup businesses. And we need to standardize and guide government funds to enable entrepreneurship investment to cultivate new industries and promote regional economic development, thus bringing more vigor for mass entrepreneurship and innovation.

People’s Daily:

My questions are addressed to Mr Shen. How do you know entrepreneurship and innovation have become new driving force for development? How many of last year’s new invention patents came from startups and innovation companies? How much of last year’s output in new technology and high technology industries came from startups and innovation companies? I agree with you that it has been a hectic year for innovation companies last year given that there were 12,000 new companies registered each day, but I feel that the difficulties faced with these companies are not only about government services because entrepreneurship and innovation are more of economic or market activities. So I’m wondering do we know how many innovation companies were closed each day or how many of the new innovation companies are actually making money. How is the performance of the startups and innovation companies against new economic background? Thank you.

Shen Zhulin:

I feel that as of now startups and innovation companies serve as a remarkable driving force for economic development and that the addition of new market entities inject great vitality into the economy. We now emphasize supply-side reform mainly because in the past the supply-side was not responsive to the market and lacked innovation, resulting in homogeneous competition and many going abroad buying foreign products. There is spacious room for startups and innovation companies to grow because they are very active and closely follow market trends. Many of the new business models and new products now in spotlight are bred by some entrepreneurial team and grown by the investment attracted to the entrepreneurs. New business models and new products make the new industries grow with strong momentum, now accounting for 8 percent of the total GDP. I’m sure that new business models and new industries have even bigger role to play in the future through mass entrepreneurship and innovation with the strong leadership of the State Council and the joint efforts of all stakeholders.

Zhao Gang:

As for how many innovation companies were closed each day, the data shows that 780,000 companies had their licenses revoked last year, less than 20 percent of newly registered ones.

China National Radio:

Mr Yin just mentioned that the next step in the development of makerspaces will be accelerated from two aspects. Does the Ministry of Science and Technology have a specific plan and timetable? There are many innovation demonstration areas and high-tech areas at the national level - what role will they play in the development?

Yin Hejun:

Thanks for your question. To further promote the development of makerspaces, the Ministry of Science and Technology plans to do the work from four aspects. First, develop makerspaces in major industrial fields - electronic information, biotechnology, modern agriculture, advanced facility manufacturing, new energy resources, new material, energy saving and environmental protection, medical and healthcare, culture and creative industry, and modern service industry. Targeting industrial demand and general technical difficulties, makerspaces should be set up in subdivided fields.

Second, encourage leading enterprises to develop makerspaces on their main businesses. An ecological community should be formed with leading enterprises as the core, with universities and research institutions actively participating, and spur the development of medium, small and micro-sized enterprises.

Third, encourage science research institutions and universities to develop makerspaces according to their own advantage areas. By focusing on advanced innovation resources and increasing the effective supply of headstream technology innovation, specialized services will be provided for scientific and technological entrepreneurship and innovation.

Fourth, enhance the global cooperation of makerspaces. Encourage leading enterprises, universities, and research institutions to cooperate with advanced entrepreneurship organizations overseas.

We should make full use of the decisive effect of the market distributing resources, and new information technologies such as the Internet. Innovation resources should be open to entrepreneurs to reduce costs. We should also provide good services for the development of makerspaces. The work pattern should be adapted to the market, and supervision and evaluation should be enhanced to create a good environment.

Innovation demonstration areas and high-tech areas at national level can play an important role in promoting the development of mass entrepreneurship and innovation and makerspaces. They have the advantage in gathering talent, technology and capital. We will make full use of their advantages and try to establish some innovation platforms at the national level. Then many services can be provided for makerspaces to better help the development of the entire economy.

Hu Kaihong:

That’s all for today’s policy briefing. Thank you.