Real Estate is Unreliable: China's Local Governments Develop Venture Capital

According to a report by BBC Chinese, as income from land sales decreases, China's local governments are shifting their focus from land to equity. However, the overall economic driving force of equity finance is far less than that of land finance linked to real estate. Therefore, this venture capital model is currently only a 'supplement' to local government finance, not a 'replacement' for land sales finance. Zhang Xue Motorcycle is a successful example of China's local government venture capital model. Registered in April 2024 and based in Chongqing, its founder, Zhang Xue, once struggled to raise 7 million RMB (approximately 32.76 million TWD) to cover employee salaries. Motorcycles are considered a high-risk target that most venture capital institutions avoid. However, 'Zhechuangtou,' a provincial state-owned enterprise primarily funded by the Zhejiang Provincial Government, led the investment, with a post-investment valuation of 1.09 billion RMB. Two months after the investment, a French rider driving a Zhang Xue Motorcycle race car won the championship in its class at the World Superbike Championship, overpowering European, American, and Japanese brands. Zhang Xue Motorcycle became famous overnight, and Zhechuangtou also gained recognition.