Government Position In The Venture Capital

Venture capital (VC) investment, due to its importance in promoting high-tech industry, is concerned by most countries. As of supporting the VC investment, Chinese government, different to the most capitalist governments mainly by establishing and improving the legal system, admits related authorities can be a competent VC investor by statutes, and mainly invest in VC business via public finance. Economics research suggests that Chinese government's orientation, as a resource allocation method, is inefficient. Nevertheless, the economics research methods cannot reveal the inappropriateness of the current governmental regulations within the legal dimension, which seriously weakened its effectiveness. Researches on the relationship between government and the economy are not rare within the legal academics, but either they are generally macroscopic, or most of them consciously or unconsciously attempt to establish a universal theory of systems, which are liable to lead to controversy, and therefore not yet become a practical guidance to the government on VC investment. Thus it is necessary to think about Chinese government's orientation within legal academics, more specifically.In Chapter 1, this writer, by discussing the definition and nature of VC in general, concludes that VC is a profit-pursuing operation of capitals. In this Chapter this writer also, by reviewing the history of VC in different countries, synthesizes the VC's characters therein, especially the roles which different governments played wherein.In Chapter 2, this writer, from the point of view of positivistic and a normative perspective, discusses the consequences and legal grounds of the government's being a competent investor of VC. He argues that Chinese government's current orientation will results in inefficient and unfair competition. To provide institutional support to the VC investment is what a government shall do. Meanwhile, there are a lot of unjustly intervenes in the related laws or regulations rendered by the Chinese government.In Chapter 3, the reasons of Chinese government's current orientation are enumerated. The legal academics of institution law, economic law and administrative law are discussed. This writer also points out that the "practical moralism" in legal issue does its work too.In Chapter 4, detailed examples are listed out which covers nine different fields in which VC are involved. This writer points out the trouble results from or may results from Chinese government's current orientation, wishing it would be helpful when re-orientation of Chinese government would happen in VC industry. This writer, by discussion of the nature of VC, along with the government's direct VC investment from both a positivistic and a normative perspective, reflected Chinese government's orientation as aforementioned. This writer points out that the existing legal provision contradicts with the demands of the liberal economics within the VC industry, which results in inefficient and unfair competition. This writer proposed that liberalistic regulations should be applied in the VC industry. The Government should not directly involve into the VC business, furthermore, it should also self-limit its regulating power, nor unjustly intervene the VC industry.