State Council guidance seeks tighter oversight as regulators tighten registration and naming rules, curb local government fund expansion and step up action against cross-border and fundraising abuses.
China’s State Council General Office has released guidance aimed at tightening oversight of private investment funds, reducing financial risks and steering the sector toward what it described as high-quality development. The document bars private funds from illegal lending and from “equity in name, debt in substance” structures, a type of arrangement that presents financing as equity while functioning like debt. It also tightens registration and naming rules, says counties and districts are in principle barred from setting up new government investment funds, and calls for stronger scrutiny of illegal fundraising, fund misuse, disguised debt financing and illegal cross-border capital flows. The guidance also calls for revisions to the Securities Investment Fund Law and sets out expectations for oversight of fund managers, information disclosure, fundraising, custodianship and gambling-style agreement arrangements. Separately, a China Securities Regulatory Commission spokesperson said regulators will remove non-compliant private fund managers, curb illegal business conducted in the name of private funds and improve risk-disposal coordination under State Council guidance. From 2023 to the first quarter of 2026, authorities took administrative regulatory measures against 1,805 private fund managers and related parties, imposed administrative penalties on 97, transferred 86 suspected criminal cases to police and the Asset Management Association of China deregistered 5,444 private fund managers.