On May 8, 2025, over 100 Chinese financial institutions, including banks, brokerages, and private equity firms, announced plans to issue sci-tech innovation bonds, aiming to raise more than 300 billion yuan ($41.46 billion). This initiative follows the Chinese government's introduction of new regulations for a "technology board" in the bond market, designed to bolster innovation amid escalating tensions with the United States.

The People's Bank of China (PBOC) is supporting this effort by providing low-cost funding, while local governments will help mitigate losses from potential defaults. Notable participants include Industrial Bank, Guolian Minsheng Securities, and Wuxi Venture Capital Group. While the bonds are intended to support technological development, some companies plan to use the proceeds for refinancing debts and general capital needs, raising questions about the alignment of the bond's purpose with innovation goals. Analysts believe that government backing could make these bonds attractive to cautious investors and ultimately stimulate technological growth.

In March 2025, the PBOC announced the launch of a "sci-tech board" within the bond market to promote the issuance of sci-tech innovation bonds by financial institutions, tech firms, and private equity investment institutions. The goal is to guide bond funds toward sci-tech innovation more effectively and at a lower cost. The PBOC plans to expand the scale of re-lending for sci-tech innovation from the current 500 billion yuan to up to 1 trillion yuan to better meet the financing needs of enterprises.

This initiative is part of a broader strategy to stimulate the economy amid challenges such as a severe property crisis, high local government debt, and weak consumer demand. In December 2024, China planned a record issuance of 3 trillion yuan ($411 billion) in special treasury bonds for 2025 to support various initiatives, including investments in advanced manufacturing sectors like electric vehicles and semiconductors.

Analysts believe that government backing could make these bonds attractive to cautious investors and ultimately stimulate technological growth. Despite warnings from the PBOC about deflation and volatile borrowing costs, global investors remain optimistic, anticipating that Chinese government intervention will stabilize markets and maintain investment in Chinese bonds.

This is not the first time China has introduced measures to support technological innovation through financial instruments. In April 2024, China announced measures to boost foreign investment in its technology sector, including support for overseas institutions to issue yuan bonds and encouragement for tech companies to raise funds through bond issuance. The current initiative differs in its scale and the introduction of a dedicated "sci-tech board" within the bond market, reflecting a more structured approach to channeling funds toward technological innovation.

The issuance of sci-tech innovation bonds represents a strategic move by China to channel substantial financial resources into technological development, reinforcing its commitment to innovation in the face of external pressures. While the initiative has garnered significant participation from major financial entities, questions arise regarding the alignment of the bond proceeds with the intended purpose of fostering technological advancement.