China Issues New Rules for Government Investment Fund Planning and Evaluation
Published 15 January 2026
Xia Yu
On 12 January 2026, the National Development and Reform Commission of China (“NDRC”) promulgated, concurrently, Interim Measures on Strengthening the Layout Planning and Investment Direction Guidance for Government Investment Funds (“Planning and Guidance Measures”) jointly formulated with the Ministry of Finance, the Ministry of Science and Technology, and the Ministry of Industry and Information Technology, as well as Interim Measures on the Evaluation and Management of Investment Directions for Government Investment Funds (“Investment Evaluation Measures”) formulated by the NDRC alone. The enactment of these two sets of interim regulations, effective from the date of promulgation for a term of five years, marks the entry of government investment fund regulation into a new phase characterized by strengthened strategic orientation and heightened emphasis on performance evaluation. Their formulation is based on the Guiding Opinions of the General Office of the State Council on Promoting the High-Quality Development of Government Investment Funds.
The core changes brought by these regulations to the regulatory framework for Chinese Government Investment Funds (“Funds”) include: 1. A Management Closed Loop: Together, they establish a full-cycle regulatory closed loop comprising “ex-ante planning” via the Planning and Guidance Measures and “ex-post evaluation” via the Investment Evaluation Measures).2. Investment Constraints: Through a “positive list” for guidance and a “negative list” for prohibitions, they ensure capital is directed precisely towards national strategic priorities.3. Performance Linkage: The introduction of a quantitative evaluation system directly links assessment results to incentives and disincentives for Funds.4. Local Articulation: The requirement for provincial-level governments to formulate “provincial investment lists” serves as a key management tool for bridging national strategy with local characteristics.
Planning and Guidance Measures
A Fund refers to a fund established by governments at various levels through budgetary arrangements, either solely or jointly with social capital, employing market-oriented methods such as equity investment to guide social capital in supporting the development of specific industries and sectors, as well as innovation and entrepreneurship. They include national-level funds established with central fiscal investment upon approval by the State Council, and local funds established with local fiscal investment upon approval.
The Planning and Guidance Measures construct a hierarchical, coordinated, and interconnected Fund system comprising national-level funds, local funds, and provincial investment lists. National-level funds address major national strategies and “bottleneck” issues. Local funds are responsible for localizing and implementing national strategies and fostering local innovation ecosystems. Synergy is achieved through methods such as jointly establishing sub-funds, thereby avoiding duplicate investments and resource dispersion. The Measures require the establishment of “Provincial Lists of Key Investment Areas for Government Investment Funds” (“provincial investment lists) as a crucial management tool connecting national directives with local practice. By translating macro requirements into clear, operable three-tier classification lists, they ensure local fund investments comply with the requirements of a unified national market while precisely aligning with local industrial realities. The design of a filing system and limited adjustment frequency (at most once per annum) grants local autonomy while maintaining policy stability and seriousness.
The Planning and Guidance Measures define the investment scope of Funds through three instruments: a positive list, a negative list, and prohibited investment behaviors. The Measures mandatorily align the commercial objectives of Funds with national strategies, regional plans, and industrial policies to ensure their policy-oriented guiding role. Firstly, a Fund must specify its investment orientation areas in its establishment plan. These areas must comply with national productivity layout and macro-control requirements, fall within “encouraged” industries under national-level industrial catalogs (e.g., the “Industrial Structure Adjustment Guidance Catalog”), align with specific requirements of guidelines for optimizing and adjusting the layout and structure of the state-owned economy, conform to national development plans, special plans, and regional plans, support key and characteristic industries at the provincial level, and encourage technological renovation and industrial upgrading in relevant enterprises. Secondly, the Measures delineate “red lines for industrial investment” and “red lines for investment behavior” for Funds. The former prohibits Funds from investing in restricted or eliminated industries under the “Industrial Structure Adjustment Guidance Catalog” and other industrial sectors explicitly prohibited by relevant plans and policy documents. Violation of these provisions may trigger the “negative behavior list” under the Investment Evaluation Measures, potentially leading to a “one-vote disqualification” in the evaluation result. The latter explicitly prohibits five categories of specific behaviors. They include increasing local government implicit debt in disguised forms, such as through equity in form, debt in substance arrangements; engaging in other publicly traded equity investments except for mergers and acquisitions, private placements, or strategic placements explicitly permitted in the establishment plan; directly or indirectly engaging in futures or other derivative transactions; providing guarantees for enterprises or projects; and conducting investments that e1tail unlimited liability. These behaviors directly pertain to fiscal and financial risk prevention and control and are a top priority for regulatory scrutiny.
The Planning and Guidance Measures set forth specific requirements regarding the establishment, adjustment, and registration of Funds. During the establishment process, the proposed investment orientation areas of a Fund must seek the opinion of the development and reform department at the corresponding level in advance. This department will review and issue a written opinion on whether the investment direction complies with national industrial policy and macro-development strategy based on relevant policies. For existing Funds whose investment direction does not comply with the new requirements, or where there are excessive numbers of similar Funds with overlapping investment areas in the same region, adjustments must be made, and an orderly exit must be completed upon the expiry of the Fund’s term. China Government Securities Depository Trust & Clearing Co., Ltd. (“China Clearing”) is responsible for operating the National Government Investment Fund Credit Information Registration System (“Registration System”). For newly established or renewed Funds, registration on the Registration System must be completed within 20 working days after the first tranche of capital contribution is received. Existing Funds that have not completed registration must complete supplementary registration within 20 working days after the promulgation of the Planning and Guidance Measures. Furthermore, Funds must concurrently apply to the finance department for registration of state-owned capital property rights and strengthen inter-departmental information sharing.
Investment Evaluation Measures
The scope of the investment direction evaluation primarily covers two broad categories of Government Investment Funds and their Fund managers. The evaluation methods include “look-through” evaluation and a “negative behavior list”. A “look-through” evaluation means the assessment is conducted not only on the master fund (top-level Fund) but also, on a consolidated basis, on its invested sub-Funds at various layers. Through this “look-through” mechanism, multi-layer nested sub-funds are brought under regulatory oversight, potentially influenced by the “provincial investment list” mechanism under the Planning and Guidance Measures. Investors participating in or assessing relevant Funds need to pay attention to both the national level “negative lists” and the “provincial investment list” of the Fund’s place of registration. Under the Investment Evaluation Measures, behaviors included in the “negative behavior list” encompass investment actions violating explicit national prohibitive provisions (e.g., investing in explicitly prohibited sectors); investing in general capacity expansion projects within industries subject to national capacity regulation; and involvement in serious breach of trust, incidents or events triggering major safety or stability risks. Once the “negative behavior list” is triggered, the Fund will face serious consequences such as not receiving an evaluation result and being notified to undertake rectification.
Information on Funds must be registered, and the investment direction evaluation for the previous year must be completed before the third quarter of each year. Within 6 months after the end of each fiscal year, Fund managers must fill in and update the relevant Fund information for the previous year in the Registration System. Based on the registered credit information, China Clearing conducts a preliminary evaluation of the entities in scope, notifying Funds at various levels whose investment direction does not meet requirements or presents issues. Fund managers must provide explanations, supplements, or undertake rectification within the stipulated timeframe. The final evaluation results are confirmed by the NDRC, which then circulates a notification and publishes the results via the Registration System.
The Investment Evaluation Measures specify a series of measures to directly link the final evaluation results with the Fund’s actual operations and resource access. For top-ranked Funds, incentives may include commendation, project promotion, factor support, financing support, and even encouragement for cooperation with national-level funds. For Funds failing to meet requirements, a progressive rectification process of “guidance → interview → notification → adjustment of contribution” is applied. For Funds exhibiting “negative behaviors”, a direct “one-vote disqualification” is applied, meaning no evaluation is issued and rectification is urged. Additionally, the NDRC will notify provinces with overall low rankings or numerous problematic funds, thereby directly transmitting pressure to local governments.
The Investment Evaluation Measures detail the evaluation indicator system for assessing Fund investment direction. This system emphasizes the assessment of policy orientation in Fund investments and covers the entire fund operation and management process. The system totals 100 points, weighted from three core components. The first component is the Policy Compliance indicator (weight: 60%), primarily evaluating the Fund’s practical role in supporting national macro-policies such as “new quality productive forces”, technological innovation, green development, and the private economy. The second component is the Productivity Layout Optimization indicator (weight: 30%), mainly evaluating the degree to which the Fund implements national regional strategies and the alignment of its investment areas with key plans. The third component is the Policy Implementation Capability indicator (weight: 10%), mainly evaluating capital utilization efficiency and the professional competency of Fund managers.
Conclusion
The promulgation of these two regulations will have a profound impact on the Fund ecosystem. Fund managers are advised to closely align their investment strategies with national and provincial industrial lists, as “investing early, investing small, investing long-term, and investing in hard tech” will become core assessment metrics affecting their ranking, subsequent fundraising, and even viability. Investors participating in Funds should augment their due diligence checklist with reviews of “policy compliance” and “historical evaluation performance” to assess the Fund’s long-term sustainability and policy risks. Hard-tech enterprises aligned with the direction of “new quality productive forces” will receive more concentrated funding support; however, it should be noted that investment from Funds will entail stronger requirements for strategic synergy and compliance. Relevant stakeholders are advised to closely monitor the subsequent issuance of provincial investment lists and the release of the first round of evaluation results, as these will serve as key indicators for judging local implementation strength and the practical effectiveness of the policies.
The core changes brought by these regulations to the regulatory framework for Chinese Government Investment Funds (“Funds”) include: 1. A Management Closed Loop: Together, they establish a full-cycle regulatory closed loop comprising “ex-ante planning” via the Planning and Guidance Measures and “ex-post evaluation” via the Investment Evaluation Measures).2. Investment Constraints: Through a “positive list” for guidance and a “negative list” for prohibitions, they ensure capital is directed precisely towards national strategic priorities.3. Performance Linkage: The introduction of a quantitative evaluation system directly links assessment results to incentives and disincentives for Funds.4. Local Articulation: The requirement for provincial-level governments to formulate “provincial investment lists” serves as a key management tool for bridging national strategy with local characteristics.
Planning and Guidance Measures
A Fund refers to a fund established by governments at various levels through budgetary arrangements, either solely or jointly with social capital, employing market-oriented methods such as equity investment to guide social capital in supporting the development of specific industries and sectors, as well as innovation and entrepreneurship. They include national-level funds established with central fiscal investment upon approval by the State Council, and local funds established with local fiscal investment upon approval.
The Planning and Guidance Measures construct a hierarchical, coordinated, and interconnected Fund system comprising national-level funds, local funds, and provincial investment lists. National-level funds address major national strategies and “bottleneck” issues. Local funds are responsible for localizing and implementing national strategies and fostering local innovation ecosystems. Synergy is achieved through methods such as jointly establishing sub-funds, thereby avoiding duplicate investments and resource dispersion. The Measures require the establishment of “Provincial Lists of Key Investment Areas for Government Investment Funds” (“provincial investment lists) as a crucial management tool connecting national directives with local practice. By translating macro requirements into clear, operable three-tier classification lists, they ensure local fund investments comply with the requirements of a unified national market while precisely aligning with local industrial realities. The design of a filing system and limited adjustment frequency (at most once per annum) grants local autonomy while maintaining policy stability and seriousness.
The Planning and Guidance Measures define the investment scope of Funds through three instruments: a positive list, a negative list, and prohibited investment behaviors. The Measures mandatorily align the commercial objectives of Funds with national strategies, regional plans, and industrial policies to ensure their policy-oriented guiding role. Firstly, a Fund must specify its investment orientation areas in its establishment plan. These areas must comply with national productivity layout and macro-control requirements, fall within “encouraged” industries under national-level industrial catalogs (e.g., the “Industrial Structure Adjustment Guidance Catalog”), align with specific requirements of guidelines for optimizing and adjusting the layout and structure of the state-owned economy, conform to national development plans, special plans, and regional plans, support key and characteristic industries at the provincial level, and encourage technological renovation and industrial upgrading in relevant enterprises. Secondly, the Measures delineate “red lines for industrial investment” and “red lines for investment behavior” for Funds. The former prohibits Funds from investing in restricted or eliminated industries under the “Industrial Structure Adjustment Guidance Catalog” and other industrial sectors explicitly prohibited by relevant plans and policy documents. Violation of these provisions may trigger the “negative behavior list” under the Investment Evaluation Measures, potentially leading to a “one-vote disqualification” in the evaluation result. The latter explicitly prohibits five categories of specific behaviors. They include increasing local government implicit debt in disguised forms, such as through equity in form, debt in substance arrangements; engaging in other publicly traded equity investments except for mergers and acquisitions, private placements, or strategic placements explicitly permitted in the establishment plan; directly or indirectly engaging in futures or other derivative transactions; providing guarantees for enterprises or projects; and conducting investments that e1tail unlimited liability. These behaviors directly pertain to fiscal and financial risk prevention and control and are a top priority for regulatory scrutiny.
The Planning and Guidance Measures set forth specific requirements regarding the establishment, adjustment, and registration of Funds. During the establishment process, the proposed investment orientation areas of a Fund must seek the opinion of the development and reform department at the corresponding level in advance. This department will review and issue a written opinion on whether the investment direction complies with national industrial policy and macro-development strategy based on relevant policies. For existing Funds whose investment direction does not comply with the new requirements, or where there are excessive numbers of similar Funds with overlapping investment areas in the same region, adjustments must be made, and an orderly exit must be completed upon the expiry of the Fund’s term. China Government Securities Depository Trust & Clearing Co., Ltd. (“China Clearing”) is responsible for operating the National Government Investment Fund Credit Information Registration System (“Registration System”). For newly established or renewed Funds, registration on the Registration System must be completed within 20 working days after the first tranche of capital contribution is received. Existing Funds that have not completed registration must complete supplementary registration within 20 working days after the promulgation of the Planning and Guidance Measures. Furthermore, Funds must concurrently apply to the finance department for registration of state-owned capital property rights and strengthen inter-departmental information sharing.
Investment Evaluation Measures
The scope of the investment direction evaluation primarily covers two broad categories of Government Investment Funds and their Fund managers. The evaluation methods include “look-through” evaluation and a “negative behavior list”. A “look-through” evaluation means the assessment is conducted not only on the master fund (top-level Fund) but also, on a consolidated basis, on its invested sub-Funds at various layers. Through this “look-through” mechanism, multi-layer nested sub-funds are brought under regulatory oversight, potentially influenced by the “provincial investment list” mechanism under the Planning and Guidance Measures. Investors participating in or assessing relevant Funds need to pay attention to both the national level “negative lists” and the “provincial investment list” of the Fund’s place of registration. Under the Investment Evaluation Measures, behaviors included in the “negative behavior list” encompass investment actions violating explicit national prohibitive provisions (e.g., investing in explicitly prohibited sectors); investing in general capacity expansion projects within industries subject to national capacity regulation; and involvement in serious breach of trust, incidents or events triggering major safety or stability risks. Once the “negative behavior list” is triggered, the Fund will face serious consequences such as not receiving an evaluation result and being notified to undertake rectification.
Information on Funds must be registered, and the investment direction evaluation for the previous year must be completed before the third quarter of each year. Within 6 months after the end of each fiscal year, Fund managers must fill in and update the relevant Fund information for the previous year in the Registration System. Based on the registered credit information, China Clearing conducts a preliminary evaluation of the entities in scope, notifying Funds at various levels whose investment direction does not meet requirements or presents issues. Fund managers must provide explanations, supplements, or undertake rectification within the stipulated timeframe. The final evaluation results are confirmed by the NDRC, which then circulates a notification and publishes the results via the Registration System.
The Investment Evaluation Measures specify a series of measures to directly link the final evaluation results with the Fund’s actual operations and resource access. For top-ranked Funds, incentives may include commendation, project promotion, factor support, financing support, and even encouragement for cooperation with national-level funds. For Funds failing to meet requirements, a progressive rectification process of “guidance → interview → notification → adjustment of contribution” is applied. For Funds exhibiting “negative behaviors”, a direct “one-vote disqualification” is applied, meaning no evaluation is issued and rectification is urged. Additionally, the NDRC will notify provinces with overall low rankings or numerous problematic funds, thereby directly transmitting pressure to local governments.
The Investment Evaluation Measures detail the evaluation indicator system for assessing Fund investment direction. This system emphasizes the assessment of policy orientation in Fund investments and covers the entire fund operation and management process. The system totals 100 points, weighted from three core components. The first component is the Policy Compliance indicator (weight: 60%), primarily evaluating the Fund’s practical role in supporting national macro-policies such as “new quality productive forces”, technological innovation, green development, and the private economy. The second component is the Productivity Layout Optimization indicator (weight: 30%), mainly evaluating the degree to which the Fund implements national regional strategies and the alignment of its investment areas with key plans. The third component is the Policy Implementation Capability indicator (weight: 10%), mainly evaluating capital utilization efficiency and the professional competency of Fund managers.
Conclusion
The promulgation of these two regulations will have a profound impact on the Fund ecosystem. Fund managers are advised to closely align their investment strategies with national and provincial industrial lists, as “investing early, investing small, investing long-term, and investing in hard tech” will become core assessment metrics affecting their ranking, subsequent fundraising, and even viability. Investors participating in Funds should augment their due diligence checklist with reviews of “policy compliance” and “historical evaluation performance” to assess the Fund’s long-term sustainability and policy risks. Hard-tech enterprises aligned with the direction of “new quality productive forces” will receive more concentrated funding support; however, it should be noted that investment from Funds will entail stronger requirements for strategic synergy and compliance. Relevant stakeholders are advised to closely monitor the subsequent issuance of provincial investment lists and the release of the first round of evaluation results, as these will serve as key indicators for judging local implementation strength and the practical effectiveness of the policies.