More than 1,000 government-guided funds have cropped up across China since 2015. By late 2020, they managed some 9.4trn yaun
After several years of loose monetary conditions and bumper dealmaking, liquidity in private equity in China began to dry up in 2018. New regulations made it harder for banks and insurers to invest. So-called “government-guided” funds set up by local governments or national ministries, by contrast, thrived. Local authorities were encouraged to launch such investment vehicles to lure startups to their cities, along with talent, technology and, eventually, tax revenues.
More than 1,000 government-guided funds have cropped up across China since 2015. By late 2020 they managed some 9.4trn yuan, according to China Venture, a research firm. A national fund focused on upgrading manufacturing technology held 147bn yuan at the last count. One specialising in microchips exceeded 200bn yuan in 2019. Almost every city of note across China operates its own fund.
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