Beijing is likely to approve four new government-backed private-equity funds to enhance the country's industrial sector, while keeping an eye on the risk of runaway investment due to meddling by regional governments, industry insiders said. 'The proposal [to set up the four funds] has been filed with the State Council and is pending approval,' a source said. 'But top officials are worried that cash-rich funds wouldn't do well under government directives. 'There are still differences among the officials. 'The central government is worried that governments at lower levels would interfere in the running of the funds, which are intended to be profit-driven.' According to Caijing magazine, the four funds, which will be part of the third batch of government-backed private equity funds, will target water treatment, shipbuilding, equipment manufacturing and urban infrastructure. Among them, the Huayu Water Industry Fund is expected to raise 30 billion yuan (HK$32.94 billion) to finance water treatment projects in the major western cities of Chengdu and Xian. In the past decade, the National Development and Reform Commission, the country's top economic planning body, has been co-ordinating efforts among seven ministry-level authorities - including the China Securities and Regulatory Commission and the People's Bank of China - to create a blueprint to develop a multibillion-yuan industrial investment fund. In late 2006, the country created its first yuan-denominated private equity fund, the Bohai Industrial Investment Fund, to focus on domestic buyout deals. Last year, Beijing approved five more yuan funds worth a combined 56 billion yuan: Shanghai Financial Industrial Investment Fund, Shanxi Coal Energy Industrial Fund, Guangdong Nuclear Power Industrial Investment Fund, Sichuan Mianyang High-Technology Industrial Fund and China-Singapore Hi-tech Industrial Investment Fund. Since the funds all had a geographical focus, Beijing had reason to worry about regional bias, the source said. 'The government-backed funds have their own edge because they are more resourceful in their home market,' said Jeff Liu, an executive director of Balloch Group, an investment advisory firm. 'In China, the funds are a challenge to the big-name global private equity firms.'