Beijing moved on Friday to strengthen regulation of China’s private fund industry, which the securities regulator says totals 23 trillion yuan ($3.40 trillion). The China Securities Regulatory Commission (CSRC) said the stepped-up measures are aimed at reducing systemic financial risks and channeling more resources into technology innovation and emerging industries.
Under the new rules, the CSRC will raise the threshold for private fund registration and intensify enforcement actions against illegal fund behaviours. Regulators will target what they described as illegitimate cross-border flows, illicit fundraising and the misappropriation of funds.
The CSRC said it would also encourage the development of long-term, "patient" capital with the explicit goal of supporting venture capital that focuses on technological advancement. The regulator framed the initiative as both an investor-protection exercise and a means to create a healthier industrial environment.
"Strengthening oversight of private funds will help remove bad actors, create a sound environment for the industry ...and protect investors," the CSRC said in a statement.
The announcement follows a recent tightening of capital controls and a major crackdown on cross-border investment announced two weeks earlier. Officials described the latest measures as a continuation and deepening of a clean-up that began in 2023. That earlier campaign included the de-registration of more than 5,000 private fund managers, the CSRC noted.
Chinese private funds, the regulator reiterated, are active in both securities investment and private equity deals. The CSRC warned that while the sector is large, it has structural weaknesses. "The industry is big, but not strong. Funding structure is imbalanced. And some funds have even become the tools for criminals," the regulator said.
To improve oversight, the new rules call for the creation of a cross-agency monitoring platform designed to detect risks and identify misconduct. The CSRC also said it will increase scrutiny of the operations of government-backed funds as part of the wider monitoring regime.
The regulator listed a suite of illegal activities it will clamp down on, including illegitimate cross-border capital flows, illegal fundraising schemes and the misappropriation of investor money. The statement reiterated the exchange rate used in reporting: $1 = 6.7671 Chinese yuan renminbi.
Officials framed the package as both protective and strategic: protecting investors and the integrity of the financial system while directing capital toward technology and emerging industries that Beijing views as priorities.