In a large step forward for China's capital market reforms and as part of the national strategy to boost the growth of its technology sector, the Shanghai Stock Exchange on Thursday launched a new science and technology innovation board that is tasked with helping the country's small and medium-sized innovation enterprises get much needed funding.

The historic moment came only seven months after President Xi Jinping announced the plan for the initiative in November 2018, in sharp contrast with the many years that it usually requires for the creation of a new board in China.

China is committed to technology advancement as a key driver of growth and the new board is necessary as it opens up a major source of funding for the often unprofitable, yet capital-thirsty start-ups in the high-tech and emerging industries, ranging from artificial intelligence and cloud computing to biomedicine and new energy vehicles.

Although they lead the trends for technology advancement, start-ups usually find it hard to raise funds because of the high listing threshold in place for the main Shanghai and Shenzhen boards－for example, a company must have a three-year track record of profitability before it can apply for an A-share listing. The new board will be a game changer helping start-ups escape the capital dilemma.

It also serves as a testing ground for capital market reform with a registration-based system instead of the approval-based system used for the main boards. This is the direction for China to build a fair, open and efficient capital market.

Currently applicants often have to wait for years before they can obtain listing approval from the China Securities Regulatory Commission, the market regulator, a situation that has forced many Chinese high-tech companies to list overseas instead.

Now that the drag of administrative approval is lifted on the new board, the application process will markedly pick up pace because it is the market that has the final say on a company's worth.

CITIC Securities predicted that about 150 high-tech companies will get listed on the new board this year, raising about 50 billion yuan ($7.23 billion) to 100 billion yuan. That compares with 105 IPOs on the Shanghai and Shenzhen bourses last year.

The easier access to market will also attract more venture capital－the incubator of high-tech－as venture capital investors can recoup their early investment via the IPO route more easily, thus creating a virtuous cycle that will facilitate high-tech development.

China has set a goal to upgrade its economy by shifting from labor-intensive industries to innovation-driven growth. The launch of the new board is an important step it has taken to enable the change that will shape the country's future.