Key facts
- China's securities regulator urged the fund industry to support domestic innovation.
- The regulator cautioned against excessive speculation and concept hype.
- Fund managers were encouraged to invest in early-stage, hard-technology startups.
- Supervision of computer-driven program trading will be tightened.
- The call comes amid global tech competition and market volatility.
China's top securities regulator, Wu Qing, chairman of the China Securities Regulatory Commission (CSRC), has urged the nation's $13 trillion fund industry to prioritize support for domestic innovation and strategic emerging industries. Speaking at a conference, Wu advised fund managers to avoid speculative bets and launching funds solely during market peaks for quick profits, emphasizing that China's burgeoning industries require capital support aligned with national strategies. He also highlighted the need for the industry to enhance global competitiveness and resilience against external shocks.
Wu's remarks follow recent moves by the CSRC to tighten oversight of the country's $3.4 trillion private fund sector and crack down on illegal cross-border investments. He noted the increasing volatility in global markets, citing a recent plunge in U.S.-traded chipmakers that erased approximately $1.3 trillion in market value. The regulator stressed that rising external uncertainties and a major rebalancing of global assets necessitate a compatible financial system for the new wave of technological revolution, particularly artificial intelligence.
Private equity firms were specifically encouraged to adopt a more strategic and fundamental role in fostering innovation, with an emphasis on long-term investment in early-stage, hard-technology startups. Fund managers were also advised to leverage new technologies like AI to enhance their operations. However, Wu cautioned against "concept hype," complex investment structures, and excessive speculation. Additionally, regulators plan to increase supervision of computer-driven program trading to ensure a level playing field and prevent the misuse of technology.