Finance & economics | Serving a higher purpose

The Chinese state is pumping funds into private equity

It sounds too good to be true to private investors—and it might be

Jun 3rd 2021|HONG KONG

STATE CASH is burning a hole in the pocket of Shenzhen’s Communist Party secretary. Wang Weizhong told angel investors late last year that if they set up a fund in the south China tech hub, the government would bear 40% of their losses. For the monstrous 400bn-yuan ($62bn) state fund backing such activity, an investment of 3m yuan—the size of a typical angel investment—is a rounding error. For private investors the invitation sounds too good to be true. It might be.

This article appeared in the Finance & economics section of the print edition under the headline “Serving a higher purpose”