Authorities clash over control of PE funds
Rival mainland finance watchdogs disagree over which rules are governing private-equity sector
A tug of war has erupted between the mainland's securities regulator and top economic planning agency for control over the private-equity sector.
The statement was seen as a confrontational engagement with the China Securities Regulatory Commission (CSRC), which conducted a major liberalisation of market regulations in February to bolster institutional buying on the volatile stock market. Among the reforms was granting private-equity groups access to the mutual fund sector.
The conflict between the two ministry-level authorities comes as an embarrassment to newly elected Premier Li Keqiang, who has pledged to streamline government to create a business-friendly regulatory environment.
In a move it said was aimed at stabilising the roller-coaster stock market, the securities regulator planned to allow about 50 non-mutual fund institutions including banks, brokerages and private-equity groups to manage funds slated for stock investments. The plan was hailed as a savvy policy since its announcement injected vigour into the mutual fund sector, which has suffered a huge brain drain in past years as star fund managers were attracted by hedge funds' better pay and perks.
However, the NDRC, authorised to manage the private-equity industry since 2005, appears determined to maintain a tight grip over private-equity funds despite what is seen by critics as inefficient control.