Fact of the Week: Chinese Government-backed Investment Funds Aim to Control $1.7 Trillion

Chinese government-backed investment funds aim to control $1.7 trillion, equal to one-third of the assets in the global private equity market.

Sources: Pan Yue, “China’s $798B Government Funds Redraw Investment Landscape, Here Are the Largest Funds You Must Know,” China Money Network, October 31, 2017; Sophy Yang, “China’s 2,041 Government Guidance Funds Size Reaches $530B: Report,” China Money Network, November 12, 2018.

Commentary: In the decade since the global financial crisis, the Chinese government has moved aggressively to stimulate capital investment that will strengthen its competitive position, both domestically and in global markets. First created in 2008, there are now more than 2,000 of these so-called “government guidance funds,” three-quarters of which have been established between 2015 and 2018. Having raised $530 billion so far, the funds already represent a massive vehicle for Chinese governments to subsidize Chinese tech companies and acquire foreign tech companies under the guise of venture capital. And the goal is for them to more than triple in size: The funds have been tasked with leveraging $1.7 trillion, which is 33 percent of the $5.2 trillion that private equity firms now control globally.