A senior government official announced Friday that Shanghai is looking at scrapping its 20 percent capital gains tax on hedge funds and using other incentives to lure more venture capital and private equity to the city.
Fang Xinghai, director-general of the Shanghai Municipal Government’s Financial Services Office, said it would be “wrong” to slow the pace of private equity, venture capital and hedge fund investment at this critical time of financial uncertainty, according to a report by Reuters.
Back in August, Shanghai officials also said they would allow foreign investors to register as local investment firms, in order to compete more effectively with other Chinese financial centers such as Beijing and Tianjin. Currently, foreign investment funds such as Carlyle Group and Bain Capital who do business in China must invest in Chinese firms through overseas units, due to China’s stringent capital controls and regulations.
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