China Unveils $138 Billion Venture Fund to Boost Quantum, AI, and Clean Energy

China is establishing a state-backed venture fund totaling 1 trillion yuan ($138 billion) to drive progress in key technology sectors, including AI, quantum computing, renewable energy, and semiconductors. Zheng Shanjie, head of the National Development and Reform Commission, stated that the fund will be structured as a public-private partnership, prioritizing long-term, high-risk investments to bolster key industries.

Announced during the ongoing National People’s Congress session, the fund will mobilize private capital to support startups and scale up innovation in “hard technology” fields. The move follows China’s recent breakthroughs in AI, including DeepSeek’s advanced reasoning model, reinforcing the country’s push to lead in global tech innovation.

China has steadily expanded its financial and policy backing for quantum technology, recognizing its potential in computing, communication, and sensing. With significant investments in both research and commercialization, the country is prioritizing dual-use applications that serve both civilian and defense needs. The newly established fund signals a stronger commitment to turning breakthroughs into real-world solutions, further intensifying global competition in the sector.

Quantum computing, still in its early stages, holds promise for solving complex problems beyond the reach of today’s supercomputers. It could revolutionize fields such as cryptography, materials science, and logistics while offering strategic advantages in national security and drug discovery. As China ramps up investment in quantum technology, the U.S. and Europe are also expanding funding efforts, each vying for leadership in the field.

Beyond quantum computing, the fund will support advancements in AI, semiconductors, and hydrogen energy storage, reinforcing China’s strategy to achieve technological self-sufficiency. 

The government has long emphasized quantum research in its five-year plans, with institutions like the USTC and firms like Alibaba and Baidu making notable strides. China has already demonstrated leadership in quantum communication, including a satellite-based quantum network for secure transmissions resistant to hacking.

China’s rapid progress in AI, including developing models like DeepSeek’s R1, has surprised global observers, particularly given U.S. restrictions on high-performance AI chips. 

China’s investment in quantum technology far exceeds other national initiatives, highlighting its ambition to dominate the sector. As Washington moves to extend its National Quantum Initiative with $2.7 billion in additional funding, Beijing is preparing to channel significantly more resources into quantum computing, AI, and other frontier technologies to enhance economic and national security.

After years of regulatory pressure, the government is also working to strengthen private sector confidence. President Xi Jinping recently urged business leaders to leverage their capabilities, emphasizing that private enterprises play a crucial role in China’s economy. 

A proposed Private Economy Promotion Law aims to protect property rights and ensure fair competition, addressing key concerns of the business community. Meanwhile, financial support for innovation is expanding, with plans to launch a science and technology bond market and increase funding for tech-driven enterprises.