- Provincial SOE regulator shifts from project approval to capital guidance as it seeks longer-term innovation bets
- AI, low-altitude economy, hydrogen energy and advanced manufacturing among priority sectors
Zhejiang’s state-owned assets regulator has launched a new “white list” program to guide provincial state-owned enterprises (SOEs) toward strategic emerging industries, marking a shift in how government capital supports technology investment.
The Zhejiang State-owned Assets Supervision and Administration Commission (SASAC) announced the initiative at a provincial SOE leadership meeting in Hangzhou on August 4, saying AI would serve as a key driver in identifying priority investment areas for provincial enterprises.
The ‘white list’ mechanism
The “white list” functions as an investment roadmap for SOEs. In recent years, companies have faced uncertainty when evaluating emerging sectors such as AI, low-altitude aviation, biological manufacturing and hydrogen energy, where technological paths and market prospects remain unclear.
The new framework aims to clarify which industries deserve priority attention and which require more cautious evaluation.
Under the program, sectors included on the list will receive stronger support and encouragement for investment, while projects outside the scope will face stricter assessment.
The ‘5+3+X’ initiative
The initiative covers Zhejiang’s “5+3+X” emerging industry framework. The “5” refers to strengthening existing advantages in areas including new energy, new materials, high-end equipment manufacturing and energy conservation and environmental protection.
The “3” focuses on accelerating growth in emerging fields such as artificial intelligence, low-altitude aviation and marine equipment.
The “X” represents frontier industries including biological manufacturing and hydrogen energy.
Zhejiang’s state-asset regulator is also introducing supporting measures designed to encourage risk-taking.
Accountability exemption
SOEs will receive greater tolerance for temporary operating losses during the cultivation phase of new businesses, while compliance exemption mechanisms will be expanded.
Investment losses caused by market factors — including technology route changes or process selection — may not trigger accountability reviews if decision-making procedures were properly followed.
The move reflects Zhejiang’s broader transition from “managing assets” to “managing capital.”
Instead of directly approving individual projects or instructing companies where to invest, the regulator is adopting a negative-list approach: defining boundaries while allowing enterprises greater autonomy within those boundaries.
Toward long-term value creation
The objective is to encourage SOEs to move away from short-term financial performance targets and toward long-term value creation.
Early data suggests Zhejiang’s state capital is already increasing exposure to strategic industries. Provincial SOEs invested 30.41 billion yuan ($4.5 billion) in strategic emerging industries in the first half of the year, up 89.8% year over year.
Zhejiang Communications Investment Group plans to invest 2.5 billion yuan in research and development in 2026, with cumulative R&D spending expected to exceed 17 billion yuan during the 15th Five-Year Plan period.
Why it matters globally
For international investors, Zhejiang’s “white list” provides a window into how China’s state capital system is evolving.
Rather than directing capital through specific administrative mandates, the province is experimenting with a framework closer to long-term institutional investors, where strategic sectors are identified but investment decisions remain market-driven.
The approach resembles the logic adopted by global sovereign wealth funds and pension funds, which typically focus on building exposure to long-duration technology and infrastructure assets rather than pursuing short-term returns.
As provincial regulators begin replacing traditional approval-based management with sector guidance and risk-tolerance mechanisms, the change signals a broader effort by China’s local state capital to become a more patient, innovation-oriented investor.
