Private equity in China: RMB funds, QFLP, guidance funds and exits

Mainland China ranks first in Asia by private equity capital under management, with Hong Kong second⁷. Reading that market from outside takes three keys. Which currency a fund is raised in decides who may invest and how money moves. A national fund regulation, in force since 2023, now sets the rules for managers. And the state is both a regulator and a large investor, through guidance funds that shape what gets funded and how it exits.

How big is China’s private equity market?

The Asset Management Association of China (AMAC) publishes the clearest count. Its quarterly statistics, titled 2025 Q4, put the total assets of asset management products at 81.58 trillion yuan², of which private fund products hold 22.42 trillion yuan². The table below is AMAC’s own breakdown of those private funds. AMAC gives the assets in hundred million yuan².

Managers follow the same pattern. AMAC counts 11,523 private equity and venture capital investment fund managers, 7,531 private securities investment fund managers and 19,231 managers in total². One caution on the dating: the title of the document reads 2025 Q4, while its opening line refers to the end of the third quarter of 2025². Quote the figures as AMAC’s statistics titled 2025 Q4.

Worked example (our arithmetic): what the AMAC table implies

The figures below are the editors’ arithmetic on the AMAC table, not AMAC statements. Converting hundred million yuan to trillions, private equity funds hold 11.18 trillion yuan and venture capital funds 3.72 trillion yuan (our arithmetic²). Together the two types are 57,160 funds out of 138,305, or 41.3 percent of the count, and 148,979.16 out of 224,191.35 hundred million yuan, or 66.5 percent of private fund assets (our arithmetic²). The 11,523 private equity and venture capital managers are 59.9 percent of the 19,231 managers (our arithmetic²).

Average size separates the two strategies. A private equity fund holds 111,800.82 divided by 29,818, or 3.75 hundred million yuan, about 375 million yuan; a venture capital fund holds 37,178.34 divided by 27,342, or 1.36 hundred million yuan, about 136 million yuan (our arithmetic²). The average venture fund is therefore well under half the size of the average private equity fund, which fits a market of many small early-stage funds. Private funds as a whole are 27.5 percent of the 81.58 trillion yuan in asset management products (our arithmetic²).

Hong Kong gives a regional yardstick. It has over 650 private equity firms with assets under management around US$230 billion, second in Asia behind the Chinese Mainland⁸. The SFC’s 2024 survey, citing AVCJ Research, puts Hong Kong’s capital under management by private equity funds at US$229 billion in 2024 against US$221 billion in 2023⁷. AMAC reports in yuan and Hong Kong in US dollars, so the two sets cannot be set side by side without a conversion neither source supplies.

Two tracks: US dollar funds and RMB funds

Money reaches Chinese companies through two kinds of fund, and the split shaped the market. A law firm special report from 2010 laid it out: private equity investment into China occurs within two distinct frameworks, offshore US dollar-denominated funds and onshore renminbi-denominated funds¹. The bifurcation is largely due to China’s foreign direct investment and currency control regimes¹. An international investor faces governmental approvals, ownership and other restrictions when investing in Chinese companies, while a domestic Chinese investor generally does not¹.

For a US dollar fund the consequence was classification. Dollar funds, typically organised offshore under foreign law and funded by investors from outside China, are classified as foreign investors under the FDI regime¹. An RMB fund funded entirely by domestic investors can invest in a broader range of industries and sectors than its dollar counterpart¹. Because it invests in local currency, central government approvals are not required to convert foreign currency into RMB and to repatriate¹.

The 2010 report defined two RMB structures. A purely domestic RMB fund is denominated in RMB, organised under Chinese law, raised from domestic Chinese investors and invested in domestic Chinese companies¹. A foreign-invested RMB fund is also denominated in RMB and organised under Chinese law, but is essentially a foreign-invested enterprise with full or partial foreign ownership¹. The operating model for the domestic type was to raise capital from domestic investors and invest in onshore companies that could be sold to the public through domestic listings or to trade buyers¹.

Sponsors that ran both types faced a conflict. Deal allocation and resource competition between a sponsor’s offshore China-oriented funds and its onshore RMB funds was a major challenge for international sponsors¹. That is a useful lens for reading any manager’s China track record, because the same company can sit in either vehicle.

How foreign money gets in: the Foreign Investment Law and QFLP

Two layers govern foreign entry. The general layer is the Foreign Investment Law, which gives foreign investors access treatment no less favourable than that for domestic investors and their investments, except where a negative list applies⁹. The State Council issues the negative list, or approves its issuance⁹. The list itself is a separate instrument; read its current edition at the source.

The private equity layer is QFLP, the Qualified Foreign Limited Partner regime. Since its launch in Shanghai in 2010, QFLP has been one of the key routes for foreign investors to deploy capital into onshore private equity and venture capital⁴. In the typical structure the fund is managed by a domestic fund manager, with the foreign investor putting in foreign currency⁴. That currency is converted into RMB under the applicable foreign exchange rules⁴, and the fund may also raise money from domestic limited partners⁴. The idea was already set out in 2010: international investors meeting qualification criteria would be allowed to invest as limited partners or shareholders in RMB funds¹.

QFLP has spread. By early 2024 programmes had been launched in close to 100 pilot areas nationwide⁴. In Shanghai alone, by the end of 2020 more than 70 institutions had taken part, investing nearly RMB 40 billion in sectors including biopharmaceuticals, environmental protection and information technology⁴. The regime appealed because it could secure relatively large foreign-exchange quotas at fund level, which cut the number of transaction-by-transaction inbound investment approvals⁴. Read the measures of the specific pilot area before relying on any condition of a QFLP structure.

For the Hong Kong end of a cross-border structure, see the Hong Kong limited partnership fund and the Hong Kong private equity market.

The 2023 regulation on private investment funds

China’s first national rulebook for private funds is a State Council regulation. Premier Li Qiang signed the decree³, and the regulation, with 62 items in seven chapters, took effect on 1 September 2023³. It aims to encourage the standardised and healthy development of the private investment fund industry, better protect the rights and interests of investors, and encourage the industry to serve the real economy and promote scientific and technological innovation³.

Its coverage is wide. It clarifies the scope of application, specifies the obligations and requirements of private fund managers and custodians, regulates fundraising and investment operations, makes special provisions for venture capital funds, and strengthens supervision and legal liability³. For how those venture provisions sit beside the other Asian regimes, see venture capital funds.

State capital: government guidance funds

The state is the largest single force behind early-stage money. In January 2025 the General Office of the State Council issued guidelines on government investment funds covering an appropriate scale, a reasonable layout, sound operations and risk control¹⁰. The guidelines contain 25 specific measures across seven areas¹⁰. Fund operations should be market-oriented, professional and based on the rule of law¹⁰. The layout is coordinated to prevent homogeneous competition and avoid crowding out non-governmental capital¹⁰. The funds focus on major strategies, key areas and weak links where the market cannot function fully¹⁰, and act as long-term and patient capital¹⁰.

The same guidelines address exits. The withdrawal system is to be optimised by expanding exit channels, encouraging private equity secondary market funds and promoting merger and acquisition funds¹⁰.

On 26 December 2025 China launched a national venture capital guidance fund⁵. The table lists its design.

Its stated principle is investing early, investing small, investing long-term and investing in hard technology⁵. For the global comparison with other venture fund rules, see venture capital funds, which covers India, Singapore and the United States as well.

Exits: the STAR Market and the listing route

A private equity fund returns money when its companies are sold or listed, so the exit venue shapes the whole market. The STAR Market was established on the Shanghai Stock Exchange in November 2018 with a pilot of the registration-based IPO system⁶. It now has 592 listed companies⁶. The sector has raised RMB 934.6 billion through IPOs and RMB 208.8 billion through refinancing, over RMB 1.1 trillion in all, with a total market value above RMB 9.6 trillion⁶.

Venture capital is part of nearly every listing story. About 90% of STAR companies received investment from venture capital institutions before listing⁶. In the past year 15 new companies listed, including three first-batch companies in the STAR Market Growth Tier⁶. The Growth Tier serves unprofitable technology enterprises, and its first three companies listed in October 2025⁶. Among the 57 companies that were unprofitable at listing, 22 have achieved profitability and dropped the unprofitable label⁶. Over 80% of STAR companies are in strategic emerging industries such as next-generation information technology and biopharmaceuticals⁶.

The exchange’s own measure of the market’s purpose is hard technology: it serves enterprises that conform to national strategies and break through key core technologies⁶. Those sectors are where the state’s guidance funds are pointed too⁵, so the fundraising side and the exit side of the market lean the same way. That alignment is context for a limited partner, not evidence about returns; nothing here predicts them.

Where Hong Kong fits

Hong Kong sits beside the mainland market as a hub for funds and managers. Its fund vehicles are growing: close to 680 open-ended fund companies had been set up by end-2025, a 43 per cent year-on-year increase, and about 1 450 limited partnership funds were registered, up 37 per cent⁸. The government set up the Hong Kong Investment Corporation to provide patient capital and strategic investments in high-potential ventures, particularly in hard technology⁸. Asia’s private equity landscape is pivoting towards hard technology, particularly artificial intelligence, biotech and new energy⁸, and China’s 15th Five-Year Plan period is the backdrop⁸.

For the licensing of a Hong Kong manager, see the SFC Type 9 licence, and for the wider region private equity in Asia.

Read next

Private equity in Asia places China beside the other markets, and the Hong Kong private equity market covers the nearest hub. Venture capital funds and growth equity cover the strategies most active in the STAR Market pipeline. The Asia hub lists the rest. The primary texts for this page are the State Council’s reports on the fund regulation, the government investment funds guidelines and the national venture capital guidance fund, the NPC’s Foreign Investment Law and the Shanghai Stock Exchange’s STAR Market review. Nothing here recommends a fund, a manager or an investment; the page is education only, on how the market is organised.