With the continuous development and maturity of China's capital market, domestic hedge funds with various strategies are developing rapidly and vigorously. According to the statistics of the data center of the private placement network as of the end of May 20 12, there are 2,272 hedge funds (Sunshine Private Placement), 1 14 portfolio funds, 103 bond funds and 85 event-driven funds. With a relative value of 28, six macro strategies and three compound strategies, the total management scale exceeds 250 billion RMB, and hedge funds have become an important force that cannot be ignored in the domestic securities market. Standardizing the development of hedge funds is conducive to the optimal allocation of resources in the domestic securities market, to cultivating a diversified team of institutional investors, and to enriching investors' wealth management choices.

However, at least as far as the legal situation is concerned, the role of hedge funds in Chinese mainland is very limited, almost zero. China has two distinct markets. On the one hand, large asset management companies that adopt the domestic hedge fund strategy approved by the China Securities Regulatory Commission (CSRC) have the legal right to raise funds from the mainland rich. On the other hand, it is an unregulated and secret private fund company. There are about 100 "Sunshine Private Equity Funds" established through trust companies (which are themselves supervised) in China; However, there are still an unknown number of fund managers operating typical "recommendation" business, many of whom are professionals in the financial industry.

For potential hedge fund management companies in China, a major problem is the lack of tools. At the beginning of the new year, the China Municipal Government approved the use of stock index futures and margin trading for short selling. But it is difficult to borrow retail stocks for short selling. Leverage, another basic tool of hedge funds, is also lacking. Hedge fund managers cannot invest by borrowing.