Chinese President Xi Jinping on Thursday announced the formation of a Beijing Stock Exchange in a bid to channel investment into promising young technology companies as avenues to raise money in the U.S. disappear.

The trading venue will augment an existing equity market in Beijing and specifically host innovative smaller companies, according to Mr. Xi and a statement from the China Securities Regulatory Commission.

Analysts described the plan as a restructuring or rebranding of an 8-year-old listing board in the Chinese capital where professional investors can trade equity in thousands of domestic companies, rather than as an equal of the traditional exchanges in Shanghai, Shenzhen and Hong Kong.

By throwing his support behind a new venue for equity investment, China’s president is signaling money is available to entrepreneurs, even as they see opportunities in U.S. markets dwindling, analysts said. Government authorities in the U.S. and China have in recent months soured on a technical listing strategy that young Chinese companies have for years used to sell equity in the U.S., in part because of Mr. Xi’s demands to protect homegrown technological secrets.

“The Chinese government really wants to bolster the next generation of technology companies,” said Lerong Lu, a lecturer in law at King’s College London. He called the plan primarily a restructuring of Beijing’s National Equities Exchange and Quotation market, or NEEQ, which is also called the New Third Board.

Stock trading in mainland China was for years limited to Shanghai and Shenzhen after those markets opened in 1990, but regulators have in the past decade or so sought to attract listings by permitting the creation of alternative trading venues and developed workarounds to capital controls to permit foreigners more access to investments. Capitalization of China’s markets, including Hong Kong, more than tripled in the decade to 2020, topping $18 trillion with more than 15,000 listings, according to the World Federation of Exchanges.

News of the Beijing Stock Exchange follows by almost three years Mr. Xi’s announcement of a Science and Technology Innovation Board to attract larger companies in the sector and compete with Nasdaq, just as a U.S.-China trade war was intensifying. Today, the Star market, part of the Shanghai Stock Exchange, is attracting domestic companies such as chip maker Semiconductor Manufacturing International Corp. that was once traded on the New York Stock Exchange. An expected $10 billion offer by seed and pesticides giant Syngenta could become Star’s biggest listing to date.

The NEEQ was another such new venue, but since opening in 2013 it has struggled with low trading volumes.

Authorities have sought to spotlight leading NEEQ companies by breaking listings into tiers, and the regulatory commission said the Beijing Stock Exchange will be created from the top level.

Yet, the choice of the Chinese seat of government and regulatory bodies as the home of the new trading venue appears to highlight contradictions in Mr. Xi’s strategy. While he wants to spur entrepreneurship, he is also determined to assert power over financial markets and tame tycoons who got rich in public markets, analysts said.

“All of the measures which have been announced for the last few weeks have something in common: centralization of power and stronger oversight,” said Alicia Garcia-Herrero, regional economist in Hong Kong at French financial firm Natixis.

In the past year, the president has nixed major Chinese initial public offerings, imposed antimonopoly regulations on the country’s giants of technology and collapsed industries such as online education. His talk recently of “common prosperity” has caused worry among rich Chinese that the Communist Party intends to pursue social equality by redistributing wealth -- and simultaneously prompted huge donations to the cause. On Thursday, billionaire Jack Ma’s Alibaba Group Holding Ltd. made a $15.5 billion commitment that includes support for technological innovation, agricultural modernization and bridging the digital divide.

One blocked IPO was that of Mr. Ma’s Ant Group, which was expected to raise more than $30 billion and draw fresh attention to the Star market Mr. Xi championed.

Unlike companies listed on China’s primary exchanges, most of the over 8,100 listings on the NEEQ, more than on the Shanghai, Shenzhen and Hong Kong exchanges combined, haven’t sold shares to the public and trading on the market is only open to so-called professional investors.

Mr. Xi announced the exchange plan in a speech on the services trade along with pledges China will support that sector by increasingly aligning rules with international free-trade agreements and piloting new free-trade zones.

Only a sentence of his speech related to the new market: “We will continue to support the innovation-driven development of small and medium sized enterprises by deepening the reform of the New Third Board and setting up a Beijing Stock Exchange as the primary platform serving innovation-oriented SMEs,” Mr. Xi said via videolink.

While there are few expectations that the Beijing market will rival the other exchanges, some analysts said it may eventually permit trading by individuals. “I think the Beijing Stock Exchange will allow retail investors to enter the market sooner or later,” said Jizhong Li, executive director of Guorong Securities Co.

—Raffaele Huang contributed to this article.

Write to James T. Areddy at james.areddy@wsj.com