The Theory Of China's Private Equity Funds Development

This paper studies the development of China's private equity funds. The specific meaning of China's private equity funds is private equity funds registered in China, does not include the overseas private equity funds which set up representative offices in China to engage in.China, who is in a emerging and transition economic development stage, is in urgently need of speed up the upgrading of the industrial structure and building an innovation-oriented country. So China will develop lots of innovative companies and exercise large-scale corporate mergers and reorganizations. But the financial function of the existing financial market and organizations could not provide effective support. Especially under the influence of the global financial crisis, Chinese innovative companies' funding problem is more prominent. International experience shows that private equity market and private equity funds can provide funds for the growth of innovative companies and corporate mergers and reorganizations, private equity funds have became the second important financing channels in developed countries, only after bank loans and IPO.Nowadays, China's private equity funds is in a budding development stage, theoretical circles are not yet clear about the concept,connotation,location,governance mechanism,external supporting environment,promoting patterns,organization forms,supervision modes of China's private equity funds, which cause a low proportion of private equity funds in China's financial structure, and can not adapt to the needs of industrial innovation and economic restructuring. So researching the development problem of China's private equity fund has an important theoretical and practical significance.This paper first systematically discusses the development issues of China's private equity funds. Dissertation begins from the concept,connotation and operation process of the private equity funds, reconstruct the financial property and location of China's private equity funds, combines the human capital characteristics and information asymmetry theory to explore the governance mechanism of China's private equity funds, proposes the opinion that China's private equity fund market is a important part of Chinese capital market,development mode should transit from the market-driven mode imposed by government to the market-driven model induced by expected profit,legislation and regulation should open the door to take a industry self-regulatory-based opinion. In the meanwhile, in accordance with the development experience of international private equity funds, we make a number of policy recommendations on how to build and improve the external environment of China's private equity funds development.