Despite the Chinese government’s strong regulations on IT companies such as Alibaba and Didi Chuxing, venture investment in Chinese science and technology startups reached an all-time high last year.
Citing statistics from research firm Prekin, the Wall Street Journal (WSJ) recently reported that venture capital invested $129 billion in 5,300 Chinese startups last year. This is a record above the record of 115 billion dollars in 2018, the highest ever.
Venture investors once stopped investing in startups when the Chinese government imposed extensive regulations on IT companies such as Alibaba. However, last year’s record shows that money has still flowed into startups.
However, a few years ago, investment was mainly focused on Internet startups related to e-commerce, but last year, most of the funds went into stocks strategically fostered by the Chinese government, including semiconductors, biotechnology, and information technology.
WSJ pointed out that China is still a popular investment target, although the Chinese government is tightening regulations on big tech companies and the decoupling of U.S.-China finance is accelerating.
“Investors’ desire for the Chinese technology sector is still active,” said Zhang Jingjing, a lawyer at law firm KWM in Hong Kong. “More and more funds are flowing into high-tech startups.”
China is still far behind Silicon Valley in the U.S. in overall venture investment. The investment in Silicon Valley was $296.6 billion last year, more than double that of China.
However, in certain basic technologies, China has already overtaken the United States. For example, according to Prekin, China’s semiconductor sector attracted $8.8 billion in investment last year, more than six times the $1.3 billion U.S. companies received.
