Authorities were expected to issue regulations on venture capital financing later this year to pave the way for the launching of such funds by the end of 1998 or the beginning of 1999, the officials said.

Chinas high-tech firms -- mainly involved in computer, biotechnology and electronics -- have been financially restrained because of high risks and thin assets, said Zhang Qian, an analyst involved in drafting the rules.

Most high technology firms were unable to meet the stocklisting requirements set by authorities because of low earnings in the start-up stage, he said.

Commercial banks were also reluctant to lend to them for fear of repayment problems, the experts said.

Moreover, government spending on scientific research and development has been limited in recent year by budget restrains, state media have said.

‘‘There is aconsensus among government departments that high-tech firms should get more support, Zhang said.

Beijing has been trying to increase investment in technical upgrading in state companies to boost their international competitiveness.

The proposed venture capital funds were likely to tap individual bank savings as well as foreign investment, analysts said.

In addition, experts have also urged Beijing to establish a second board outside the main stock market to allow high-tech firms to list their shares, Zhang said.

As of the end of 1997, China had set up 53 high-tech development zones across the country with more than 10,000 firms operating in them, he said.

Experts said the fund move was also inspired by booming venture capital investments in Californias Silicon Valley in the United States and rising venture capital investment in other Western countries.