Recently China's banking regulator issued two documents ordering the banking sector to step up financial services to major science and technology projects and local high-tech enterprises.

The move is aimed at creating a favorable financial environment to encourage innovation.

It's also intended to support the government's National Guideline on Medium and Long-Term Programme for Science and Technology Development (2006-20), the China Banking Regulatory Commission (CBRC) said yesterday.

According to the documents commercial banks and other financial institutions should offer credit to the following types of high-tech enterprises:

-- Those responsible for research and development in the key sectors laid out in the National Guideline for Science and Technology.

-- Those engaged in national or provincial-level high-tech projects.

-- Those providing high-tech content and additional value or are active in high-growth sectors like bio-engineering, new materials development, energy conservation and environmental protection.

-- Those with leading technologies, sound credit histories and good economic and social benefits.

The document requires commercial banks to offer services that are suited to the needs of high-tech enterprises. It also highlights the need for financial support for export-oriented enterprises and small-scale technology businesses, the CBRC said.

In the second document the CBRC ordered policy banks to set up special accounts for projects that support the country's key science and technology programs.

The document outlines the principles, processes, supporting fields and risk control and prevention mechanisms for policy banks offering financial support to key science programs. "The policy banks must undertake such policy-oriented financial services through public bidding," the document states.

Under the National Guideline on Science and Technology, issued by the State Council a year ago, science and technology is expected to contribute at least 60 percent of the country's economic growth by 2020. It's currently 30 percent.

(China Daily February 1, 2007)