China's innovation in sustained growth

Flush with capital and entrepreneurs, the overall Chinese innovation prospect can be positive, leading to the booming exit of private equity.

Thanks to sufficient capital and entrepreneurs, the overall Chinese innovation market prospect is expected to be positive this year, which may lead to the booming exit of private equity through initial public offerings.

According to a report of SPD Silicon Valley Bank yesterday, sustained wage growth and lower threshold for affordable credit are the two key driving forces for sustained growth in innovation, which relies heavily on early-stage investment and talented professionals. 

China's performance in these two aspects is getting closer to that in the United States, indicating that the prosperity of China's innovation is approaching that of the United States step by step, the report said.

China's innovation economy is now embracing an opportunity similar to that in the United States, as China has avoided the high waves of various shocks such as capital crunch in 2008. Meanwhile, China's scale of venture capital has climbed to the same level as that in the US.

Considering the investor demand, artificial intelligence will be valued higher while the general valuation level will remain stable in the second half of 2017. Also,  the exit of private equity is expected to flourish with larger value of initial public offerings in the second half, the report said.

At the same time, SPD Silicon Valley Bank, as one of the ten Venture Loan pilot banks in China, said their scheme for the pilot project is still pending approval. This project will enable the bank to hold the warrants to improve risk management for loans, but the process must be operated through a third-party since SPD Silicon Valley Bank is a Sino-foreign joint venture bank.

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