A venture capital fund worth about $30 billion was launched by the Chinese government with the aim to upgrade technology and boost the country's industrial sector.
According to a statement from the regulator responsible for state-owned assets, the setting up of the fund was led by big banks and government holding companies.
The Financial Times reported that the model was similar to the one organized by Temasek, a state investment company launched in the 1970s to promote the reform of government-owned enterprises in Singapore.
The government has reportedly hesitated on the plan as it promoted a more hands-off approach in investment.
But some analysts doubt if the Singaporean-style of reform would be allowed by China's Communist Party which has vowed to strengthen control of state assets.
"This looks similar to the Temasek model. It's also an experiment in state enterprise reform," Shen Jianguang, chief Asia economist at Mizuho Securities, said. "This is a sort of stimulus, but it's probably better than releasing a lot of liquidity into the system because that just goes to property and financial companies."
The companies that supported the fund said that they will choose their investments carefully.
The reform of state-owned enterprise is seen as the key to revitalize the country's economy and the billions of dollars for the country's industrial sector came as President Xi Jinping called for state cash to be directed to help the ailing industry.
The central government urged state companies in June to increase capital spending as fixed-asset investment dropped to a 16-year low.
The fund will be based in Shenzhen, known as the region's tech hub, indicating that the effort would assume a more market-oriented role.
"Shenzhen has become famous as the house of private-sector VC and PE that supports start-ups," Raymond Yeung, chief greater China economist at ANZ Bank, said. "My concern is whether the government can ensure state funds go into the hands of genuine projects."