China Tightens Oversight of 23 Trillion Yuan Private Fund Industry

China has tightened oversight of its 23 trillion yuan private fund industry, raising the bar for private fund registration and stepping up enforcement against illegal activities. According to RTHK, the China Securities Regulatory Commission said the move aims to reduce financial risks and encourage long-term “patient” capital to support tech-focused venture capital investments. The CSRC said regulators will set up a cross-agency monitoring platform to identify risks and misbehaviours, and will increase monitoring of government-backed funds’ operations. It also said it will clamp down on illegitimate cross-border flows, illicit fundraising and misappropriation of money. The announcement came two weeks after China launched a crackdown on cross-border investment and tightened capital controls, and follows clean-up efforts that began in 2023, including the deregistration of more than 5,000 private fund managers.