SVB contagion will not hinder Chinese tech sector

Significance

Its collapse, and the ensuing contagion, has raised serious questions about the outlook for China’s tech ecosystem. The issue is especially salient given the political significance Beijing has attached to technological innovation in advancing its national strategic goals.

Impacts

• China’s domestic banking sector is resilient and will count on Beijing to help absorb contagion risks, if necessary.
• China’s traditional financial sector will step into the market gap created by the absence of SVB.
• Risk avoidance will remain a major priority of new entities stepping into the funding ecosystem of tech startups and scaleups.