To help develop its financial system, China is going to support the launch of additional hedge funds, the South China Morning Post reports. However, Bejing is not going to give them a free hand; the government promises to police the funds and offer governing oversight.
Analysts believe the Chinese government is trying to level the playing field between mutual funds and hedge funds.
China gave a boost to the mutual fund industry in the 1990s, hoping to attract institutional investors to lead the way. This effort has met with success, as today, there are 60 fund firms in China with $300 billion in assets under management.
Hedge funds, on the other hand, have been illegal on the mainland, and in 2001, four of them were found guilty of manipulating the prices of a technology stock.