China’s State Council plans to create a CNY40 billion ($6.52 billion) investment fund to support startups in emerging industries.

The fund will include capital from the central government as well as major financial institutions and other private sources, state-run news agency Xinhua said. The government said the fund would target mainly innovative small and medium-sized firms in the early stages of development.

The launch of a government-supported venture-capital fund, the Financial Times said, fits into the government’s efforts to reduce the country’s over-reliance on state investments in property, infrastructure and heavy industries by boosting funding in the private sector.

Xinhau quoted Zhang Zhanbin, a researcher at the Chinese Academy of Governance, as saying: “Similar funds initiated by the government in the past have been ineffective due to weak management, administrative intervention, and an absence of strict assessment and supervision.”

The State Council said that to improve on previous efforts, the fund will select market-oriented operations and will be overseen by professional fund management firms, which will be chosen into a open bidding process.

The central government first launched VC investment initiatives in 2009 to tap strategic industries to fuel economic growth. But restrictions on IPOs, which made it difficult for investors to pull out, slowed the sector’s growth, TechCrunch noted.

The restrictions have been removed and VC funds have bounded back over the past year. The government has invested about CNY9.1 billion in VC programmes since 2009, according to official data quoted by Xinhua.