Injecting Certainty into Future Industry Development Through Institutional Innovation

Financial Times Reporter He Jueyuan, Guo Bohao

The future industry represents the direction of a new round of technological revolution and industrial transformation. Its high level of uncertainty is a prominent feature that distinguishes it from emerging industries and traditional industries. Uncertainty in investment returns leads to capital being “dare not invest” or “reluctant to invest,” while the variability of technological routes results in high trial-and-error costs for enterprises. The “14th Five-Year Plan” outline calls for “establishing mechanisms for increased investment and risk sharing in future industries,” aiming to hedge against uncertainties in the development process through the certainty provided by institutional design.

Future industries are driven by cutting-edge technologies, covering key areas such as quantum technology, biomanufacturing, hydrogen energy and nuclear fusion, brain-computer interfaces, embodied intelligence, and sixth-generation mobile communication. An official from the Ministry of Industry and Information Technology pointed out that China has comprehensive advantages such as a complete industrial system, large industrial scale, and rich application scenarios, providing fertile ground for future industry development. However, China’s future industry development also faces issues like insufficient systematic planning and an unstable technological foundation.

Currently, China’s future industry development mainly relies on fiscal and state-owned capital investments, with insufficient participation from social capital, and underinvestment in original innovation and pilot testing stages. How to break dependence on fiscal funds, encourage various business entities and social capital to actively participate, and stimulate the vitality of enterprises as innovation主体, is key to advancing future industries.

The solution lies in bridging the gap between the high-risk nature of future industries and the risk-averse tendencies of capital. On one hand, establishing an investment growth mechanism to solve the “where does the money come from” financing dilemma; on the other hand, creating risk-sharing mechanisms to eliminate the “fear of investing.”

Building an investment growth mechanism focuses on creating a “government-guided, market-led, multi-party coordination” financing framework. Given the long cultivation cycle and high risks of future industries, it is necessary to strengthen patient capital, establish more guiding funds suitable for long-term development, and leverage a “mother fund + sub-fund” structure to mobilize social capital for co-investment and long-term investment, forming a capital relay. Additionally, financial innovation should be promoted by developing specialized products like intellectual property pledge financing to channel financial resources precisely to startups. Further, deepening the reform of fiscal fund allocation from “allocation to investment” by converting fiscal appropriations into equity investments can realize a virtuous cycle of “investment—exit—recycling,” ensuring continuous financial support.

Establishing a risk-sharing mechanism emphasizes creating a multi-party sharing system with clear responsibilities, risk sharing, and benefit sharing. It is necessary to promote joint risk-taking among government, enterprises, financial institutions, and research institutes to reduce the trial-and-error costs for individual entities. Differentiated assessments should be applied to government investment funds and state-owned capital investments in future industries, establishing a fault-tolerance mechanism centered on due diligence and compliance responsibilities, fostering an environment that encourages innovation and tolerates failure. Meanwhile, policies supporting first-of-its-kind equipment, new materials, and software should be implemented to address key bottlenecks in technology maturation and market validation. Using scenario-based applications to hedge against technological and market uncertainties will further strengthen social capital’s confidence and expected returns in participating.

The implementation of investment growth and risk-sharing mechanisms also requires a mature industrial ecosystem. Currently, China’s future industry ecosystem is relatively weak; it needs to cultivate and expand leading科技企业 and unicorns, leveraging their “chain leader” roles. It should also promote small and medium-sized enterprises to pursue specialization,精细化, and创新, focusing on breaking industry barriers and facilitating the free flow of talent, capital, data, and other elements within the ecosystem.

The “14th Five-Year Plan” period is a critical window for the strategic layout of future industries. Establishing mechanisms for increased investment and risk sharing not only supports industry development at the financing level but also consolidates制度根基 for full-chain innovation, helping China seize opportunities and gain initiative in the global new round of technological revolution.

(Edited by: Wang Zhiqiang HF013)

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