China Has Cash but Lacks Tech Capital, Former Shanghai Mayor Tu Says

China does not lack money — it lacks tech capital. That was the core message from Tu Guangshao, former Executive Vice Mayor of Shanghai and former Standing Committee member of the Shanghai Municipal Party Committee, in a keynote speech at the 2026 Third "Tech-Industry-Finance Coordinated Development Forum" on October 23.

"China actually doesn't lack money — what it lacks is tech capital," Tu said in the speech, titled "The 'Six Ones' Framework and the Development of Tech Finance." International Finance News hosted the forum, with think-tank support from the Xi Jinping Economic Thought Research Institute at Shanghai University of Finance and Economics and the Shanghai Institute for Science of Science.

Tu's framework, the "Six Ones," runs across six dimensions: focus on a new perspective, break through a key point, strengthen a growth chain, expand a coverage area, weave an ecosystem network, and build an integration system. For practitioners, the practical question is simple: what does this change for anyone allocating capital in China's innovation economy?

Why tech capital is the bottleneck

Tu called tech capital "the core strategic resource" within the tech finance system and judged that the global economy has formally entered an "era of tech capital." His diagnosis is structural. China's banking system, dominated by indirect financing, has ample liquidity. But those funds differ in nature from what innovation requires: capital that can bear risk, invest long term, and empower enterprise growth — venture capital, long-term capital, patient capital, and "smart capital."

Traditional finance won't stretch to fit. Tu argued that the means of production, asset forms, industry formats, and risk characteristics of tech companies differ markedly from those of traditional enterprises. Financial methods built for traditional industries are hard to adapt, and without new concepts, tech finance practice will struggle to get off the ground.

Take artificial intelligence. Behind the global AI competition, Tu said, is essentially a competition in tech finance and capital strength. AI faces two funding challenges:

• It requires sustained, long-term, massive capital investment rather than short-term opportunistic money.
• There is a time lag between AI innovation and commercial returns, opening a gap between long-term investment and investment payback.

If capital matching falls short, technological development may lose momentum.

Where the financing chain breaks

Tu mapped the non-linear growth curve of sci-tech enterprises across three stages:

• "Valley of Death" (lab validation): technical feasibility undetermined, funding needs relatively limited.
• "Darwinian Sea" (prototype to scale-up): high failure rate, requires a relay of venture capital.
• "Darwinian Sea" (mass production to marketization): fierce competition, requires scaled capital and industrial resources.

The current financing system has gaps between these stages, in Tu's view — a key bottleneck for commercializing technological achievements. Tech finance must accompany enterprises across their entire life cycle without interruptions in funding.

A 20% share and a three-tier industry map

Coverage matters too. Tu stressed that technological innovation spans the entire modern industrial system, not just high-tech niches. Under the thinking of the 15th Five-Year Plan, the system splits into three tiers: traditional industries (transformation and upgrading), strategic emerging industries (development and expansion), and future industries (accelerated layout). Today, strategic emerging industries account for about 20%, future industries are just getting started, and traditional industries still hold a very high share.

Each tier innovates differently — future industries focus on original innovation, strategic emerging industries on diffusion, traditional industries on application — so financial allocation should differ too. Tu called for a categorized, adapted financing system with shared risk, coordinating government funds, policy-based finance, and commercial finance.

Policy momentum is building. Tu noted that venture capital and patient capital have been written into national-level deployments in recent years, including the thinking behind the 15th Five-Year Plan. But shortcomings remain: participant diversity is insufficient and channels are narrow. China must shore up capital formation, circulation, and exit to build a full-chain, multi-tiered tech capital ecosystem. Shanghai's International Financial Center, he said, should act as a hub converting social capital into high-quality tech capital — "not just a matter of quantity, but even more a matter of quality."

No single force advances

Tech finance cannot advance alone, Tu said — it needs an ecosystem integrating banks, securities firms, insurers, and venture capital in a multi-tiered collaborative network. Safeguards include tech information sharing, talent connections, tech credit evaluation, intellectual property valuation, technology trading markets, risk-sharing mechanisms, and tax policy.

Integration is not simple splicing. Tu framed the goal as a two-way cycle in which "technology empowers finance and finance nourishes technology." With AI-era computing power, algorithms, and hardware iterating rapidly, the financial system must identify and adapt to change — "it cannot just wait by a stump for a hare."

The stakes: if capital formation, circulation, and exit gaps close faster, funding sources for China's VC and PE markets should diversify, and bank-affiliated capital may find new ways into innovation. For long-cycle, high-investment tracks like AI, whether patient capital can match R&D pace will directly determine the speed of technology conversion and industrialization.