Recently, the General Office of the State Council issued the "Guiding Opinions on Promoting the High Quality Development of Government Investment Funds", which is the first important document issued at the national level to promote the development of government investment funds. It proposes to promote the formation of a high-quality development pattern of government investment funds with moderate scale, reasonable layout, standardized operation, scientific efficiency, and controllable risks. Identifying the positioning and serving the overall situation, government investment funds are investment funds established by governments at all levels through budget arrangements, individual investment or joint investment with social capital, using market-oriented methods such as equity investment to guide various social capital to support the development of related industries and fields, as well as innovation and entrepreneurship. They play an active role in serving national strategies, promoting industrial upgrading, and facilitating innovation and entrepreneurship. The Third Plenum of the 20th Central Committee of the Communist Party of China proposed to encourage and regulate the development of angel investment, venture capital, and private equity investment, better leverage the role of government investment funds, and develop patient capital. The Guiding Opinions specify that government investment funds should "highlight government guidance and policy positioning". The Guiding Opinions emphasize the better combination of promoting an effective market and a proactive government. The fund should focus on major strategies, key areas, and weak links where the market cannot fully play its role, attract and drive more social capital, adopt market-oriented methods to support innovation, entrepreneurship, and related industry development, and enhance the professional and market-oriented operation level of the fund, "said the relevant person in charge of the Ministry of Finance. Specifically, one is to standardize the operation and management of funds, optimize the mechanism for selecting investment projects, and prevent deviation from policy objectives and competing with the public for profits. The second principle is to adopt a market-oriented approach to select and determine fund managers, fully leverage the role of managers, and mobilize their enthusiasm. The third is to optimize the development environment of funds, encourage the cancellation of restrictions on the registration location of funds and managers, and encourage the reduction or cancellation of return investment ratios. The fourth is to standardize regulatory behavior. Government departments should fully respect the development laws of funds and the characteristics of project investment, and not interfere with the daily management affairs of funds and specific project investment decisions through administrative means. Government investment funds need to find the right positioning and better serve the overall development of the country. The Guiding Opinions have important guiding significance for correctly handling the relationship between the market and the government in the management of government investment funds, promoting the high-quality development of government investment funds, and are consistent with the requirements of fully exerting the decisive role of the market in resource allocation and better playing the role of the government under the high-level socialist market economy system Yang Zhiyong, President and Researcher of the Chinese Academy of Fiscal Sciences, stated. Hu Bo, associate professor of the School of Finance of Renmin University of China, believes that the Guiding Opinions fully affirm the role of government investment funds, release the signal of encouragement and support, and help to boost market confidence; Fully respecting the laws of the fund industry and paying attention to the compatibility between government investment funds and social capital is conducive to leveraging the effect of government investment on driving social investment. Standardizing government investment funds is an important component of improving China's government investment system. It is necessary and timely to standardize government investment funds and better leverage their role in promoting investment, stabilizing the economy, and promoting high-quality development Chen Daofu, Deputy Director of the Finance Institute of the Development Research Center of the State Council, said that the Guiding Opinions respond to the main problems and market demands in the operation of government investment funds, and better leverage market forces to support industrial development and innovation and entrepreneurship while adhering to the nature of fiscal funds. The Central Economic Work Conference on Developing and Strengthening Patient Capital proposed to improve the multi-level financial service system, strengthen patient capital, attract social capital to participate in venture capital, and cultivate innovative enterprises in a gradient manner. Patient capital is a form of capital that focuses on long-term investment, not pursuing short-term returns as the primary goal, but placing more emphasis on long-term returns in projects or investment activities. It is usually not affected by short-term market fluctuations and has a long-term outlook on capital returns and a higher tolerance for risks. The Guiding Opinions clarify the need to develop and strengthen long-term capital and patient capital, including: firstly, reasonably determining the duration of government investment funds, and leveraging the cross cycle and countercyclical regulatory role of funds as long-term capital and patient capital. The second is to actively guide long-term capital such as national social security funds and insurance funds to invest and strengthen patient capital. Thirdly, in areas that require long-term layout, government investment funds can adopt a continuous investment approach to ensure investment continuity. The fourth is to optimize the mechanism for adjusting the proportion of government investment and boost market investment confidence. For venture capital funds, the government's contribution ratio can be appropriately increased. To develop and strengthen patient capital, we must fully respect market laws and better leverage the guiding and driving role of government investment funds The relevant person in charge of the Ministry of Finance stated. Encouraging innovation requires tolerance for failure. Previously, some local fund operations lacked fault tolerance and exemption mechanisms, making it difficult to fully stimulate investment vitality. To address issues such as fund managers being hesitant to invest, hesitant to withdraw, and afraid to take responsibility, the "Guiding Opinions" clearly establish and improve a fault tolerance mechanism, "loosen restrictions" on funds and management institutions from the top-level institutional level, encourage government investment funds to better play their role, and improve investment efficiency. The Guiding Opinions have designed a fault tolerance mechanism, improved the standards and processes for exemption recognition, and ensured that fault tolerance has both policies and mechanisms, as well as operable processes and standards Chen Daofu said. Yang Zhiyong believes that the "Guiding Opinions" should improve the performance management of government investment funds, focus on the achievement of policy goals, establish a sound fault tolerance mechanism, tolerate normal investment risks, respect the rules of fund investment operation, and not simply use individual project or annual profit and loss as the basis for assessment. This is conducive to the operation of government investment funds and promotes their better use as long-term capital and patient capital. The exit of government investment funds to promote a virtuous cycle of investment is of great significance for achieving the circular utilization of funds, optimizing resource allocation, and promoting industrial upgrading. The inability to exit the fund upon maturity will affect the virtuous cycle of "investment exit reinvestment". The Guiding Opinions propose a series of measures to address the difficulties and bottlenecks in the exit process of government investment funds, such as limited exit channels and inadequate exit mechanisms. For example, standardizing fund exit management, improving exit policies for different types of funds, fund managers should establish a fund exit management system, and develop exit plans. Government investment funds should scientifically and reasonably determine the exit period and specify the exit conditions in their articles of association or partnership agreement. Expand the channels for fund exit, promote the alignment and standardization of regional equity market rules, and encourage the development of private equity secondary market funds, merger and acquisition funds, etc. For a period of time, some government investment funds have clustered in popular tracks, with serious "homogenization", and some regions blindly follow the trend to set up funds. In order to better leverage the role of government investment funds and improve their investment efficiency, the Guiding Opinions clarify that funds should find their positioning accurately, coordinate their layout reasonably, prevent homogeneous competition and crowding out effects on social capital, including supporting the construction of modern industrial systems and optimizing the functions of industrial investment funds; Strengthen overall planning, integrate and optimize fund layout; Clarify the hierarchical management requirements for fund establishment. The Ministry of Finance will work with relevant departments to formulate and issue supporting rules around government investment fund budgets, state-owned asset management, performance evaluation, information statistics, credit construction, registration and filing, and build a '1+N' system for government investment funds The relevant person in charge of the Ministry of Finance said. (New Society)