Chinese premier backs local listings for start-ups

Local governments should give tax incentives to start-ups, incubator organizations and angel investors who back innovative activities, Li said, while chairing a meeting of the State Council on Thursday, according to a statement.

Variable interest entity (VIE) structures are a feature of many VC-backed Chinese companies that have gone public in the US. Under the current rules, foreign investors cannot have full exposure to Chinese companies that operate in "negative list" industries, such as the internet, education and telecom.

The legal status of the structure - actually a series of contractual agreements - has never been clear. But earlier this year, the mists began to lift. The Ministry of Commerce (MofCom) issued a draft rule that would legalize and regulate foreign investments using these structures.

Separately, the government is actively developing the National Equity Exchange and Quotation (NEEQ), known as the New Third Board, to make it easier for start-ups to list and get access to funding.

Li urged local governments to set up venture capital funds, providing public office buildings and internet network resources to start-ups. The government also supports the development of innovative financing channels such as equity crowdfunding platforms.

In January, the State Council announced the launch of a government-guided venture capital fund worth RMB40 billion ($6.5 billion) to support start-ups in emerging industries.

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