At the end of May, the National Development and Reform Commission (NDRC) applied to the State Council for approval to launch four experimental operations of industrial investment funds, most of which would be worth billions of yuan. It is not certain whether or not the operations will be approved, but this act of the NDRC has opened a dialogue on how to boost the market-oriented development of a private equity fund (PE) in China.

 

Currently in China, PE is still in the initial stages of development, which leads to complications. PE has a lot of room to grow in a long run because Chinese state-owned and private enterprises have problems with their management and capital structure and the efficiency of the Chinese capital market is comparably low. On the other hand, as a means for raising finances, PE needs to be supported by an effective law system and fair play in the market in order to strike a balance between investors and managers.

 

How to withdraw governmental interference from PE business and let the “invisible hand” play a major role may be a long-term concern for the PE market.

For futher details, please read the full story in Chinse http://www.caijing.com.cn/newcn/home/headline/2007-07-09/24179.shtml

(China.org.cn July 9, 2007)