China issues guidelines to boost oversight of private investment funds

BEIJING, June 5 (Xinhua) -- The General Office of the State Council on Friday released a document outlining measures to strengthen supervision, prevent risks and promote the high-quality development of private investment funds.

The guidelines deliver a systematic upgrade of supervision by improving mechanisms, addressing regulatory shortcomings and enhancing cross-department coordination.

According to the guidelines, authorities will crack down on major illegal and non-compliant activities to foster a good environment for standardized, healthy and stable development of the private investment fund industry.

The guidelines lay out specific arrangements in improving the private investment fund rule system and strengthening supervision over government investment funds and state-owned enterprise investment funds.

China's private investment funds now manages assets worth of 23 trillion yuan (3.38 trillion U.S. dollars), accounting for 15 percent of the total volume of the country's asset management business.

As an important source of patient capital, private equity (PE) and venture capital (VC) funds have invested in over 100,000 projects in the new economy sector, with invested principal amounting to 4.7 trillion yuan. Nearly 90 percent of companies listed on the sci-tech innovation board received support from PE and VC funds prior to their initial public offerings.

Private securities investment funds now make up 10 to 20 percent of the total trading volume of China's A-share market, making them an important force in invigorating the capital market and optimizing the investor structure.