Chinese premier encourages start-up firms to list locally

SHANGHAI (Reuters) - Chinese premier Li Keqiang said the government would promote domestic listings of start-up firms with "special ownership structure", part of China's efforts to encourage innovation and boost funding for productive sectors of the economy.

At a conference held by China's state council, or cabinet, on Thursday, Li also encouraged the development of the venture capital industry, and urged local governments to give tax incentives to start-up firms, incubators and angel investors who back innovation, according to the central government website.

Many Chinese companies, including technology start-ups and internet giants such as Alibaba, Baidu and Tencent have adopted the so-called variable interest entity (VIE) structure.

Because foreign ownership in China's internet sector is blocked, and Chinese internet startups have difficulty meeting profitability requirements to list onshore, the VIE structure was developed to satisfy the ownership requirements of overseas security regulators without technically breaking Chinese law.

But China plans to relax rules for domestic listings, and is also vigorously developing over-the-counter equity markets to give start-up firms easier access to funding.

(Reporting by Samuel Shen and Pete Sweeney; Editing by Shri Navaratnam)