TLDR: China is significantly increasing its financial backing for leading artificial intelligence companies, dubbed ‘AI dragons,’ through a series of strategic measures. These include relaxing listing requirements on the Shanghai Stock Exchange’s STAR Market, promoting the issuance of specialized sci-tech innovation bonds, and providing direct investment via government funds, aiming to bolster the nation’s technological self-reliance and global competitiveness in AI.
Beijing, China – In a concerted effort to solidify its position as a global leader in artificial intelligence, China has unveiled a robust package of financial support measures aimed at its burgeoning AI sector. These initiatives are designed to provide substantial capital to key technology companies, often referred to as ‘AI dragons,’ fostering their long-term growth and innovation.
Central to this strategy is the reform of listing requirements on the Shanghai Stock Exchange’s tech-focused STAR Market. In March 2025, the exchange reinstated the ‘fifth listing standard,’ a crucial move allowing companies with a market capitalization of at least 4 billion yuan (approximately US$557.57 million) to apply for listing, even if they have not yet achieved profitability. This standard is specifically tailored for enterprises engaged in complex technologies with high capital demands and extended research and development cycles, common characteristics of cutting-edge AI firms.
Further enhancing the STAR Market’s appeal, China Securities Regulatory Commission (CSRC) chairman Wu Qing announced a new ‘1+6’ reform plan during the Lujiazui Forum in June. The ‘1’ signifies the reopening of the fifth listing standard for unprofitable companies, while the ‘6’ comprises six supporting measures. These include a pilot program for experienced institutional investors, a faster and more efficient IPO review process, wider application of the fifth listing standard, support for unprofitable companies already in the IPO pipeline to raise more capital, clearer rules for refinancing and strategic investor qualifications, and the introduction of more investment products and improved risk management tools. This comprehensive reform addresses past challenges, as over 60% of companies attempting to go public under the fifth standard in 2023 failed due to factors like unsuccessful R&D and weakening market demand.
In parallel, the People’s Bank of China and the CSRC jointly announced in May 2025 their support for the issuance of sci-tech innovation bonds. This policy encourages financial institutions, technology enterprises, private equity, and venture capital firms to issue such bonds. The framework allows for flexible bond term design, promotes the issuance of long-tenor bonds to align with the tech sector’s funding needs, simplifies disclosure requirements, and encourages local governments to provide interest subsidies or guarantees. The initiative has seen rapid uptake, with 147 institutions collectively issuing 374.8 billion yuan of sci-tech innovation bonds as of June 7. This includes 223.9 billion yuan (US$31.21 billion) from 39 financial institutions and 151 billion yuan (US$21.05 billion) from 108 non-financial enterprises. A notable example is the Bank of China’s issuance of 20 billion yuan in sci-tech innovation bonds in May 2025, featuring a three-year maturity and a 1.65% coupon rate.
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Beyond these market-based mechanisms, the government is also providing direct investment through various state-backed funds, underscoring a multi-pronged approach to ensure ample capital flow into the AI ecosystem. These measures collectively highlight China’s strategic commitment to nurturing its domestic AI champions, aiming to accelerate technological breakthroughs and secure a dominant position in the global artificial intelligence landscape.
