With a total capital scale of 10 billion yuan ($1.43 billion), the Yellow River Basin Industrial Development Fund, or the Yellow River Basin Funds of Fund (FOF), was launched recently in the Jinan Start-Up Area, a demonstrative zone for new and old kinetic energy conversion in Shandong province, to boost the high-quality development and ecological protection of the Yellow River.

The first phase of the FOF, which is valued at 100 million yuan is part of the 200-million-yuan investment received from the provincial-level new and old energy conversion guidance fund.

Shandong is the first to establish the Yellow River Basin FOF with the equity fund management institution Industrial Security Capital. The FOF focuses on pillar industries, urban construction, investment promotion and acquisitions, inventory optimization and high-quality projects and mainly invests in new-generation information technology, high-end equipment, new energy and new materials and biomedical industries.

The FOF will help lure long-term funds, boost the real economy and provide more financial support for scientific and technological innovation enterprises.

In August 2022, the Ministry of Finance issued the "Central Government's Financial and Tax Support Plan for Promoting Ecological Protection and High-quality Development in the Yellow River Basin", which is in line with Shandong's "Several Fiscal Policies to Support Ecological Protection and High-quality Development in the Yellow River Basin". The documents both encourage the establishment of development funds for the Yellow River Basin's ecological protection and high-quality development.

Long Xiaoyan, an associate researcher at the Financial Research Center of the Chinese Academy of Fiscal Sciences, noted that Chinese FOFs have dual functions of capital allocation and policy guidance.

"The government-guided fund plays the role of professional institutional investors and guides more social capital into major areas and weak links in economic and social development," said Liang Lei, Party secretary and chairman of Shandong New Growth Drivers Fund Management Co Ltd.