What is "patient capital"?
As a technical term in the financial field, "patient capital" was first mentioned in Politburo meeting of the Chinese Communist Party.
At the end of last year, after the Central Economic Work Conference, China Securities Regulatory Commission put forward according to the spirit of the conference, "vigorously promote the reform of investment side, promote and improve the policy environment conducive to medium and long-term capital entering the market, and guide investment institutions to strengthen the countercyclical layout and expand ‘ Patience capital ’ " . Among them, the expression "patient capital" has aroused widespread concern.
As the name implies, "patient capital" refers to long-term investment capital, which generally refers to funds with high tolerance for risks and long-term prospects for capital return.
The industry believes that "patient capital" is usually not disturbed by short-term market fluctuations, can provide stable financial support for investment projects for a long time, can play the role of market stabilizer and economic development booster, and then promote the innovation and development of enterprises.
What is the relationship between "patient capital" and developing new quality productivity?
Scientific and technological innovation is the core element of developing new quality productivity. On September 8, 2023, General Secretary of the Supreme Leader put forward "new quality productivity" for the first time during his inspection tour in Heilongjiang. The general secretary stressed that integrating scientific and technological innovation resources, leading the development of strategic emerging industries and future industries, and accelerating the formation of new quality productivity.
New quality productivity has the characteristics of high technology, high efficiency and high quality. It is not a day’s work to realize scientific and technological innovation and technological breakthrough, and it needs long-term and stable financial support.
As the main body of production and operation, enterprises play a key role in developing new quality productivity. However, due to the original and subversive scientific and technological innovation activities, the uncertainty of innovation results is more prominent, and it is difficult to produce immediate return on investment. Most science and technology enterprises that are still in the initial stage usually face "growth troubles" such as financing difficulties and expensive financing.
To cultivate and develop new quality productive forces, it is necessary to introduce more financial resources and guide long-term funds to continuously increase supply. Strengthening financial innovation and expanding "patient capital" are the important engines to accelerate the cultivation of new quality productivity.
"Patience capital" is not only concerned with the short-term income of enterprises, but also focuses on the long-term, comprehensively considers non-financial indicators such as technological innovation, leading edge and business model of enterprises, takes confidence in the development potential and long-term income of enterprises, and provides a steady stream of funds for the development of new quality productivity.
How to strengthen "patient capital"?
Promoting financial efficiency and empowering new productivity is not only an important measure to deepen the structural reform of the financial supply side, but also an important action to implement the spirit of the Central Financial Work Conference.
Strengthening "patient capital" can promote the investment reform of China’s capital market, which requires the concerted efforts of the government, market and investment institutions. At present, some places in China have begun to explore ways and paths to expand "patient capital".
The Report on the Work of Shanghai Municipal Government in 2024 proposes to guide long-term capital, patient capital to invest early, small and hard technology. Simply put, it is to encourage investment institutions to increase investment in start-ups, small and micro enterprises and science and technology enterprises.
In this regard, experts suggest that, first, it is necessary to set a performance appraisal standard for capital with a longer period of return on investment. The second is to create a weather vane of "investing early, investing small and investing in hard technology" to serve the national strategy. Third, efforts should be made to create an atmosphere in which the government leads investment and institutions follow investment, guide investment institutions to pay attention to the long-term value of enterprises, drive more capital to become long-term capital and patient capital, and attract more investment institutions to lay out long-term development in China.
Finance is the blood of the national economy. Financial activity leads to a strong economy, and a strong economy is more conducive to cultivating new quality productivity.
This time in Politburo meeting of the Chinese Communist Party, following the requirement of "optimizing the capital supply structure and using more financial resources to promote scientific and technological innovation and advanced manufacturing" put forward by the Central Financial Work Conference in 2023, the CPC Central Committee further deployed financial assistance to cultivate new quality productivity and deeply stimulate the innovation potential of enterprises.
As employees expect: to develop new quality productivity, science and technology and finance should be placed in the same important position. Actively developing venture capital and expanding patient capital is an important measure for the financial industry to be "new" and vigorously serve the development of new quality productivity.
(Central Radio and Television General Station CCTV Network)