国务院: Strictly Prohibits Private Funds from Illegally Engaging in Lending, "Nominal Equity, Actual Debt", and Other Practices

Odaily Planet Daily News: The General Office of the State Council has issued guidelines on strengthening supervision, preventing risks, and promoting the high-quality development of private investment funds. The guidelines state that, adhering to both goal-oriented and problem-oriented approaches, and targeting issues such as the need to improve the access mechanism for the private fund industry, inadequate supervision, an imperfect institutional framework, insufficient inter-ministerial and central-local coordination, the failure of some government and state-owned enterprise investment funds to fulfill their investor responsibilities, and the use of some private funds as tools for illegal activities, new types of corruption, and hidden corruption, the guidelines aim to build a robust institutional system and long-term mechanism for strengthening supervision and preventing risks, thereby driving industry development amidst regulation and improvement through development.

The guidelines emphasize adhering to functional positioning, coordinating overall planning, optimizing new supply while revitalizing existing stock, supporting the strong while limiting the weak, improving quality and efficiency, and strictly prohibiting private funds from illegally engaging in activities such as lending and "nominal equity, actual debt". They uphold classified supervision, implementing supervision tailored to different categories based on dimensions such as capital contributors and product types. The guidelines also insist on managing both legal and illegal entities, applying strict supervision to lawful institutions, resolutely shutting down illegal ones, and severely cracking down on illegal activities.