China eases tech M&A loan rules in pilot program to boost innovation

BEIJING - China has announced a series of relaxed rules for merger and acquisition (M&A) loans targeting tech companies in a pilot program aimed at channeling more capital into sci-tech innovation and enhancing China's technological competitiveness, according to the country's financial regulator on Wednesday.

Amid efforts to address long-standing financing challenges for tech companies engaged in strategic mergers, banks participating in the pilot program are now permitted to lend up to 80 percent of transaction values for acquisitions involving controlling stakes in tech firms, up from the previous 60 percent cap, according to China's National Financial Regulatory Administration.

Loan repayment periods have also been extended to a maximum of 10 years, compared to the prior seven-year limit.

Standards for cities, banks and tech firms involved in the pilot program have been formulated based on consultations with the National Development and Reform Commission, the Ministry of Science and Technology, and the Ministry of Industry and Information Technology, according to an administration official.

The pilot program spans 18 cities, including Beijing, Shanghai, Shenzhen and Chengdu, and focuses on cities with robust innovation ecosystems, such as those within the Beijing-Tianjin-Hebei cluster, the Yangtze River Delta and the Greater Bay Area, as well as regional hubs in Wuhan, the Chengdu-Chongqing area and Xi'an.

Eligible banks include major state-owned lenders, joint-stock banks and urban commercial banks with strong risk management capabilities, while tech companies eligible for these loans must demonstrate strong research and development capabilities, clear market potential in the commercialization of technologies, and solid credit histories, according to the official.

The regulator has pledged to monitor fund usage closely, and to cultivate specialized financial teams to ensure the effective implementation of the pilot program, offering functional financial support for tech company M&As.