China’s State Council Releases New Guidelines: CSRC Builds Multi-Layered Private Equity Fund Regulatory Framework to Boost High-Quality Growth

The General Office of the State Council has issued guiding opinions aimed at the high-quality development of China’s private equity fund industry. The directive mandates the China Securities Regulatory Commission (CSRC) to establish a comprehensive and multi-dimensional supervision system, emphasizing improved coordination between ministries and between central and local government authorities.

The new regulatory framework is designed to impact a market valued at 23 trillion yuan. A central objective of the guidelines is to promote the growth of patient capital and innovation capital to support the advancement of new quality productive forces.

Implementation and the Three-Year Action Plan

Following the release of the guiding opinions, the CSRC announced that it will formulate a three-year action plan to implement the directives. This plan will serve as the roadmap for building the integrated supervision system and ensuring the high-quality growth of the private equity sector.

The regulatory approach will shift toward look-through supervision and graded and classified supervision. These mechanisms are intended to increase transparency and ensure that funds operate in compliance with national standards while enhancing protections for investors.

Regulatory Focus and Market Integration

The guiding opinions highlight several critical areas for regulatory improvement and operational compliance:

• Strengthening the requirements for fund raising and information disclosure.
• Improving the custody systems for private equity funds.
• Managing the role of state-owned funds and addressing risk resolution within the industry.
• Combating illegal and non-compliant behaviors.

The initiative also seeks to better align private equity activities with the broader capital markets. Specifically, the guidelines aim to facilitate the connection between private equity and the A-share market, as well as the Science and Technology Innovation Board, commonly known as the STAR Market.

By refining the top-level design of the industry, the State Council intends to create a more stable environment for venture capital (VC) and private equity (PE) firms to provide long-term funding for technological innovation and industrial upgrading.