• An investor walks past a screen showing stock market movements at a securities firm in Hangzhou.

An investor walks past a screen showing stock market movements at a securities firm in Hangzhou. (Photo : Getty Images)

According to analysts, the newly launched China Internet Investment Fund is expected to foster entrepreneurship and innovation within the Internet sector via a market approach. It is a $14-billion Internet investment fund co-sponsored by China's Ministry of Finance and the Cyberspace Administration of China.

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There are six strategic partners that have funded the first 30 billion yuan of the investment fund. These include the Guoan Group Co Ltd., CITIC, China Post Life Insurance Corp Ltd., the Industrial and Commercial Bank of China Co Ltd., and China's three major telecom carriers.

It is reported that three state-owned banks will provide financial services as well as 150 billion yuan of credit for enterprises for raising money for the Internet investment fund.

"Based on market operations, the fund aims to cultivate and promote a new driving force in the Internet sector," said Deputy Finance Minister Yu Weiping.

Shen Meng, director of Chanson & Co, a boutique investment bank in China, said, "The establishment of the State-backed fund was of great significance for the development of the Internet sector and the Internet Plus industry."

He added: "It will bring new opportunities for all parts of the Internet sector. However, it is difficult to make profits for enterprises without their own core technologies and those unable to cater to consumers' new needs."

According to a report published by the China Internet Network Information Center, China's global ranking among countries with a strong Internet-based industry had moved up to 25 in 2016 with a score of 72.8 out of 100, which surpasses the average of G20 economies for the first time.

"They should invest in firms and projects of real value to avoid bubbles in the innovation field," said Li Zichuan, an analyst at Analysys, a Beijing-based Internet consultancy.

Shen also has the same sentiment and said: "The fund has several advantages, such as abundant money and supportive policies. However, it will take on risks for higher yields."