At an executive meeting of the State Council on Sept 1, a decision was made to set up a national fund to encourage the growth of small and medium-sized enterprises, and enhance the driving force for entrepreneurship and innovation through cooperation between the government and the market.

“The fund is by no means money owned by any department or authority. It should be a market-oriented fund, not money in the pocket of administrative departments,” Premier Li Keqiang said at the meeting.

A board of directors for the fund will be established and be responsible for confirming the fund’s policies and targets, supervising its investment, assessing its performance and readjusting unqualified fund management institutions.

“It should be made clear that the board only serves as the government’s general supervision over the fund. The fund should be operated completely in accordance with commercial rules. While abiding by rules and regulations, it should also seek appropriate returns, letting the market play its role,” Premier Li said.

Related departments should honestly perform their individual responsibilities, he added.

According to the Premier, the board is, on the one hand, responsible for mobilizing equity funds through equity intervention, to support the growth of SMEs; on the other hand, it is required to supervise the performance of the fund and submit reports every year, as well as correct problems revealed in the process.

It was decided at the meeting that the government will invest 15 billion yuan ($2.36 billion) in the fund as initial capital, to attract the participation of private and State-owned businesses, financial institutions and local governments, to set up a fund of up to 60 billion yuan.

Premier Li encouraged the authorities to work to attract more private capital.

He said the government should not support the development of enterprises as it did in the past. That is, local governments had to visit different State Council departments to get the money.

“This is inefficient and might lead to corruption,” Li said. “The responsibility of the government is to guide equity funds to invest in SMEs by making the rules.”

The Premier also asked related parties to change the old way of implementing support policies, and introduce the ideas of marketization, in order to improve the efficiency of the capital.

As a major policy, Premier Li said, the national fund will offer great support for enterprises and solve their financing difficulties, if it is done right.

It can also play a significant role in increasing jobs and boosting mass entrepreneurship and innovation, he said.