Real Estate , Consumer Staples , Industrials Author：Huicong Yi Nov 04, 2019 08:00 PM (GMT+8)

The money will flow into the companies with 'hard tech.'

Cash banknote lot. Image credit: Pixabay

On 2 November, China's national advanced manufacturing fund phase 2 was initiated; it is set to accelerate the manufacturing industry's upgrading and transformation.

The first phase of China's national advanced manufacturing fund accumulated CNY 20 billion, mainly investments in industries such as rail transit equipment, industrial robots, new energy vehicles and advanced manufacturing firms such as CATL.  

Apart from the advanced manufacturing industry fund, the national integrated circuit industry investment fund phase two was also established on October 22, managing more than CNY 200 billion. Compared with phase one, the funding source of the second phase is more diverse and includes many integrated circuit industry core areas. Tier 1 shareholders include state-owned giants such as China Tobacco, China Unicom, and China Telecom.

In terms of investment preference, the second phase of the fund aims at establishing an independently controllable industry chain around integrated circuits. Some industry insiders expect that the second phase of the fund will start investing in November this year.

With the uptick in the smart manufacturing market since 2015, the sector has been widely favored by the capital market, with a significant increase in the quantity and scale of financing. In 2016-2018, China's smart manufacturing industry had a strong development momentum and ushered in a financing peak. In 2018, the financing amount reached USD 32.5 billion, with 942 financing cases.

The STAR market also shows that China has attached big importance to the pillar of the whole economy: manufacturing and pushing it towards transformation. President Xi Jinping announced the establishment of the STAR board in Shanghai to make it an international finance center and a global center for high technology and innovation. President Xi recently emphasized that the STAR market should support and encourage the firms with “hard-tech” to go public and improve information disclosure practices as well as regulation. 

With capital being injected into the firms with "hard tech," the manufacturing industry will continue to evolve and will become much smarter over time.