This paper addresses the issue of R&D investment in relation with supply shifts in financing. We will examine A-stock listed firms, with an unbalanced panel of data based on the R&D inputs from 2009 to 2014. Following the majority of previous studies, we use the system GMM to estimate the modified Euler Equation. We find that rightward shifts in the supply of operating cash flows and equity will promote private R&D investment. By comparison, increasing debt finance has a limited impact on the R&D expenditure levels. Following Brown and Petersen (2011), we find that firms with financial constraints tend to increase their cash holdings to smooth out R&D investment. Furthermore, divergence in the results of sub-sample groups provide evidence that support the age and ownership effect. Young firms, and non-state-owned firms, tend to invest more on R&D. Therefore, they are usually faced with more financial constraints when compared to mature and state-owned firms. This paper contributes to the existing literature by filling in the holes within the research on emerging markets. The most important implication of our findings is to understand the link between financial development and economic growth. Given the increasing importance of R&D with relation the growing Chinese economy, we are able to make policy suggestions based on our findings. The government should take actions to relax financial constraints for innovative firms, including an increase of equity finance and facilitating debt finance, and therefore achieving the goal of an innovative economy. Keywords: financial constraints, R&D investment, equity finance