Growth, Consolidation and Liberalization: China's PE/VC Sector in 2020

2020 was a year of both change and continuity in China's private equity/venture capital (PE/VC) sector. China proposed significant antitrust legislation and began undertaking a series of antitrust enforcement actions against large internet companies. China also passed export control and foreign investment national security review legislation, which mirrored developments in other jurisdictions. The impact of this legislation will create both opportunities and challenges for market participants in the country's PE/VC sector. China also accelerated the implementation of its onshore capital markets reforms through the Science and Technology Innovation Board (STAR Market) and the ChiNext Board, paving the way for secondary listings of existing Hong Kong listed companies and primary listing for companies incorporated outside of China. At the same time, Chinese companies continued to list in the United States in advance of a de-listing bill that has now passed both the U.S. Senate and House by unanimous voice vote and has been signed into law. Over time, the trend towards more local listings in both Hong Kong and mainland China is likely to accelerate the shift in investment structures used by both Chinese and non-Chinese investors.

Key Legislation in 2020 Impacting China's PE/VC Industry

Following the trend in other jurisdictions, China proposed major antitrust legislation and implemented export controls, both of which will present both opportunities and challenges for market participants in China's PE/VC industry.