The Chinese government is planning to promote entrepreneurship and innovation via venture capital (VC), according to a document issued Monday.

China will consider expanding tax policies for VC firms, the State Council, China's cabinet, said in a guideline.

Restrictions on VC companies investing in high and new tech enterprises will be relaxed.

Since 2007, VC firms have enjoyed tax breaks for certain investments in high-tech companies with less than 500 employees and annual sales under 200 million yuan (32.6 million U.S. dollars).

Tax preferences will also be granted for investment in innovative activities in the seed and the start-up stages, including investment by angel investors.

China will guide state, private and foreign capital to invest in promoting entrepreneurship and innovation.

The government will also strengthen the role of the capital market in supporting innovation.

The country will give full play to the role of Shanghai and Shenzhen stock exchanges in equity-based financing, and support qualified innovative companies and start-up firms in issuing corporate bonds.

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