Just give me the money? It's far from that simple. Financial support for science and technology innovation and the real economy
On September 22, 2023, at the 5th Bund Financial Summit, discussions continued to spread about how finance can support science and technology innovation and the real economy.
Experts point out that the biggest problem for technological innovation is how to deal with the risks and uncertainties faced by innovation, and how to cross the "valley of death"; For the financial system, risk pricing and risk allocation are the most basic and important functions. It is precisely these that create a natural connection between finance and technological innovation, and provide a perfect reason for finance to support technological innovation.
However, "insufficient risk identification ability, dysfunction in risk pricing and risk allocation are precisely the 'Achilles heel' of China's financial system, which has become the fundamental reason for insufficient financial support for technological innovation." Zhang Xiaojing, Director of the Institute of Finance at the Chinese Academy of Social Sciences and Director of the National Finance and Development Laboratory, stated that the "structural advantages" of state-owned enterprises, the development responsibilities and soft budget constraints of local governments, the institutional preferences of financial institutions, and the central government's last resort all contribute to the irrationality of risk pricing and allocation of financial resources. However, he also emphasized that it cannot be one-sided to believe that the government should not play a role in supporting innovation and economic and social development, but rather "must be based on the premise that the market plays a decisive role.".
In addition to the weaknesses of the financial market, "ideological enlightenment" is also a keyword. "Financial support for science and technology innovation requires a 'ideological enlightenment'. Traditional thinking is that the 'present' is the accumulated result of all the 'past';"; Financial thinking values the capitalization of the present and the future. The value of capital depends on future expectations rather than the past, which is a true epistemological revolution and intellectual enlightenment. Therefore, the theoretical basis for financial support for science and technology innovation is that the current financial support for science and technology innovation should depend on the expectations of future technological innovation achievements.
This requires better tolerance. "Will disruptive innovation have its own peers? Will there be historical references? None." Zhang Xiaojing believes that it is necessary to enhance the inclusiveness of science and technology innovation evaluation standards. At the micro level, investment failures should be allowed, and state-owned enterprises should establish fault-tolerant mechanisms; At the macro level, volatility and foam should be tolerated. Holding the risk bottom line does not mean zero tolerance for financial risks. The exercise of financial functions is achieved through fluctuations, just as the role of price mechanisms is also achieved around value fluctuations, which means that regulation must be inclusive.
In the view of Professor Xu Ming from the School of International Finance and Law at East China University of Political Science and Law, technology and capital are the two wings of the real economy, while technological innovation and capital market innovation are the two engines. He believes that innovation in the capital market can further stimulate the basic functions of the capital market, thereby better serving the real economy.
How to innovate the capital market? Xu Ming believes that from the perspective of financiers, the proportion of direct financing should be further expanded. At the same time, the registration system should take the path of marketization. The market-oriented construction of the capital market requires handling the "four relationships" well.
One is the relationship between the government and the market. "This market needs to achieve clear expectations and trust as the foundation. The capital market is a market of expectations, information, and capital. Among them, expectations and information are prerequisites. Without information and expectations, capital cannot enter the capital market." In Xu Ming's view, the marketization of the registration system first requires clear expectations. On the one hand, it is necessary to maintain the scientific and reasonable normal issuance of IPOs, and on the other hand, it is necessary to ensure fair and transparent information disclosure.
The second is the relationship between the government and enterprises. To give the right of choice to the market, the issuance and pricing should be determined by the market.
The third is the relationship between the government and investors. During the IPO process, information disclosure should be guided by investor needs.
In addition, the relationship between the government and intermediary agencies is to clarify responsibilities and fulfill their duties. "The government cannot replace intermediary agencies in making decisions. The responsibility of intermediary agencies themselves is to ensure authenticity."
