High returns and preferential policy will help push China's venture capital (VC) investment to a new high.

The Zero2ipo Group, a leading VC service provider, predicted a high growth in the country's VC investment, which will amount to 2.5 billion U.S. dollars this year.

Foreign VC funds will continue to take the dominant role in terms of both deal number and amount invested, with information technology, new media, telecommunication and semiconductor remaining the appealing sectors, said Michael Kang, managing director of Zero2ipo.

The average return rate was more than 30 percent on China's VC market, while foreign venture capitalists gaining twice as much as their domestic counterparts.

To spur the booming of VC industry, China has issued a new tax policy, writing off venture capitalists' tax equivalent to 70 percent of their investment.

The new policy applied to investors who have invested in unlisted small- and medium-sized high-tech companies for two years and above, according to the new policy.

China's VC investment rose 51.5 percent to 1.78 billion U.S. dollars last year, a record high, with 73.3 percent coming from foreign investors.

(For more biz stories, please visit Industry Updates)