A Study On The Fostering System Of Equity Investment Itemsources In The Development Of Private Equity Funds In China

The financial tsunami, which began in the United States and spread worldwide quickly in 2008, has a profound impact on the international economic system. In terms of the geographical span, the crisis extends from the USA to the whole world. In terms of the economic structure span, the crisis extends from the virtual economy to the real economy. On the background of the aftermath of the international financial crisis, the slow recovery of the global economy and the transformation of China’s economic structure, the relationship between the real economy and the virtual economy should be focused again, which is never out of fashion in the economics. If we emphasize the virtual economy blindly, with the ignorance of the foundation of the real economy, it will lead to the false impression of the economic boom that is full of bubbles. On the contrary, if we seek the real economy blindly, with the ignorance of the innovation of the virtual economy, it will lead to the recession of the whole economic system. The real economy and the virtual economy must be balanced and realize the harmonious development.The private equity fund is one of the greatest achievements in the field of financial innovation in the 20th century. It is the product of the virtual economy essentially, but the projects it invests come from the real economy, especially from the numerous small and medium-sized enterprises. So the equity investment itemsources become the key point connecting the real economy and the virtual economy. And the equity investment itemsources are the important carriers of private equity funds serving the real economy. Private equity funds play an important role in the improvement of the enterprise governance, the adjustment of industrial structure and the optimization of financing structure. However, the short supply of high-quality equity investment itemsources has become the bottleneck in the further development of private equity funds. Without high-quality itemsources, private equity funds cannot earn value-added proceeds through investing cycle, and the real economy loses internal impetus driving the health of the economy either. Therefore, in order to achieve the sustainable economic growth, we must vigorously foster real economy itemsources that are the foundation of financial markets. They will reserve inexhaustible sources of life for the prosperity and vitality of the real economy.In this dissertation, it uses the fostering of equity investment itemsources as the subject of study, which is based on the systematic framework of high-quality real economy itemsources. Unlike previous studies on private equity investment projects from the point of virtual economy itself, the dissertation has an innovative research perspective. Based on Financial Development Theory and Public Finance Theory, the dissertation’s starting point is equity investment itemsources matching the development of private equity funds, with the comprehensive application of Microeconomics, Information Economics, New Institutional Economics and Symbiosis Theory. By means of theoretical and empirical analysis, it concludes that high-quality equity investment itemsources are insufficient in China. And through drawing lessons from domestic and international practices, it puts forward the specific fostering mechanism of equity investment itemsources with government’s guidance. The core contents include the following parts.First, complementary resources lead to a symbiotic relationship between private equity funds and equity investment itemsources. In the framework of ecological symbiosis theory, it analyzes characteristics of symbiotic units, patterns and environments of private equity funds and equity investment itemsources in details. On the basis of symbiosis degree analysis, it concludes empirically that they may be in an asymmetric mutualistic symbiosis pattern. It is the key link that accelerates fostering high-quality equity investment itemsources to realize the symmetrical mutualistic symbiosis and stable evolution of private equity funds and equity investment itemsources.Second, the shortage of equity investment itemsources results from both theoretical and realistic dimensions. From the theoretical point, equity investment itemsources generate significant positive externalities for the sustainable development of regional economy. So they should be classified to quasi-public goods economically. Then the dissertation demonstrates that the shortage of equity investment itemsources is an inevitable outcome in the microeconomics external model. Moreover, the asymmetric information situation leads to the market failure between investing and financing parties of equity investment itemsources. So it cannot achieve balanced allocation of itemsources relying on the market mechanism automatically. From the realistic point, the reasons from private equity funds and quality constraints of small and medium-sized enterprises also make equity investment itemsources incapable of natural maturity. Therefore, all these factors determine that we must depend on the government’s support, which is as the friend of market, in fostering equity investment itemsources. It is extremely important that the role of government orientates "guiding" instead of "clominanting". It deduces government’s utility model of fostering equity investment itemsources in the framework of government function of New Institutional EconomicsThird, based on experiences of domestic and international practices, it concludes government’s functions in fostering equity investment itemsources that are channeling capital, guaranteeing credit, constructing legal system and preferential policies incentive. Meanwhile, we must avoid the distortion in screening itemsources because of the government’s dual identity as the direct investor and rale maker.Fourth, the strategic position of equity investment itemsources in the harmonious development of real economy and virtual economy determines that the construction of fostering system is a systematic engineering. The basic principle of fostering system is ’government guidance and market operation". And it adopts the comprehensive fostering model of venture capital and incubator. Its main body is the government-guiding fostering fund of equity investment itemsources. The specific operating pattern of fostering fund can be divided into six aspects, including sources of funds, limited partnership organization form, admission mechanism of fostering objects, deep fostering mechanism, compensation and motivation mechanism, and risk management mechanism. In addition, in order to ensure the effective operation of fostering fund, the fostering system must be accompanied by the construction of supporting facilities and environments by government. And it will deepen the public service functions of fostering system through the cooperation with the private equity industry association.From the micro point of view, the success of fostering equity investment itemsources could realize the project’s economic benefits, reflecting its economic value. And from the macro point of view, it could attract capital to invest, increase tax revenues, resolve employment problems and accumulate qualified personnel, reflecting its social value. Through the establishment of equity investment itemsources fostering system, it can support the growth of entrepreneurship with the help of financial capital. Then we can find the industry that represents the future and the mechanism to connect the technology and industry. Therefore, we can transform the traditional industry fundamentally and realize the scale expansion and integration of industrial chain. Except for this, we can also lay a long-term sustainable development foundation for the upgrade of industrial structure and transition of economic growth mode. At last, it will bring the running source water for economic development and give a helping hand for the promotion of China’s comprehensive national strength.