Forbes published a report recently saying that private equity continues to face hurdles in China.

China's private equity industry is in a state of change and is experiencing growth. We reported earlier this month on the debut investment of China's first home grown private equity fund.




Foreign private equity funds face a number of hurdles. Among them, the threat of protectionist sanctions - both in China and in a fund's home country - makes private equity investment more risky.

Wu Xiaoling, deputy governor of China's central bank, recently noted that China's huge trade surplus also works to hinder foreign private equity investment in China. Speaking recently in Beijing, Wu said that China's growing trade surplus has "forced the government to tighten controls on foreign capital inflows which in turn have slowed potential private equity investment from overseas."

Wu also pointed out that international investors often face higher taxes. And she said that China should "develop more private equity funds denominated in yuan in order to reduce pressure caused by inflows of Foreign exchange."