Abstract: On January 14, 2017, taking the news conference on the new book Private Equity LP, The 1st Seminar of Green Legal Global Alliance came to a successful end in Beijing DOCVIT Law Firm and established the first batch of research topics and set up the project closely related to the development of the private equity market. Afterwards, Green Legal Global Alliance has continued to undertake the research work of follow-up legal issues and published supporting books interpreting private equity LP from the perspective of the law field in 2017, making constant contributions to the industrial development.

On the afternoon of January 14, 2017, News Conference of Private Equity LP (a book redefining LP) & "Capital Allocation Strategy, Investment Practice and Operation" Charrette sponsored by CITIC Press Group China Road Research and Publication Center and Green Legal Global Alliance and co-organized by LP Think Tank came to a successful end in Beijing DOCVIT Law Firm, the 56^th floor, Fortune Financial Center (FFC). The book Private Equity LP "redefines LP".

Liu Guangchao, secretary general of Green Legal Global Alliance and director of Beijing DOCVIT Law Firm presided over the meeting. Mr. Wang Zhongmin, the vice president of National Council for Social Security Fund, PRC attended the meeting and delivered a keynote speech.

Wang Zhongmin said in his speech that he is a practitioner of the LP Chinese market. China's economy is undoubtedly in a major transition period. Over the past 30 years, Chinese economy has maintained a double-digit growth rate for most of the time. This is mainly attributed to a large amount of capital investment, which has driven the process of infrastructure building, urbanization and industrialization. Thanks to the demographic dividends, the growth of labor has promoted lower-level manufacturing and export business; by virtue of strategies featuring the transition from market mechanism to technologies, a large number of foreign capitals and technologies have been introduced. However, as the above development mode consumes too much energy, resources and environmental capacity of China, if we continue with this kind of development strategy, China's rapid economic growth in the near future is bound to be unsustainable. To this end, economic restructuring, industrial upgrading, and competitiveness enhancement of enterprises have become the required courses for China's economic development in the near future.

Wang Zhongmin proposed that in order to improve China's current economic structure, industrial structure, product structure and technical structure, private equity, venture capital and other first-level market participants are the most important forces, and also the mechanism that can function. This strength, from venture capital terminal to private equity terminal, is able to correct the deviations in today's industrial structure and product structure, and serves as a major engine in terms of inventory downsizing, excess-capacity addressing, and economic restructuring. Private equity, as an effective financial tool to upgrade the industries and to drive the enterprise innovation in China will play an important role in China's financial ecological system in the future. Private equity investment, as a financial tool, not only provides support to the real economy, but also injects vitalities into the real economy; the real economy, with great vigor and a bright prospect, is created in an innovation-driven and reform-oriented manner. In order to get a foothold in the strategic emerging industries, and to constitute a truthful and detailed picture of strategic emerging industries by conforming to the market-based logic, China must attach top importance to the advance of private equity investment. From the initial angel to VC terminal, earnings terminal, PE terminal, then to merger and acquisition terminal, and finally to market-based transaction, every link is applied, through new transactional structure and in a new transactional manner, to display the positive results of strategic emerging industries.

When talking about the role of a limited partner in private equity, Wang Zhongmin said that as the top of the whole private equity investment ecosystem, investors behind the private equity fund-- limited partner (LP), plays an important role in guiding the sound development of private equity market and optimal allocation of capital. LP investor calls for long-term strategic plans and effective tactical approaches in terms of asset allocation, investment practice and management operations. In addition to conforming to the logic of private equity investment with local characteristics, LP shall get a truthful and detailed picture of China's whole financial system, as well as the pivotal role of private equity in accelerating economic restructuring, industrial upgrading and enterprise innovation. As for LP in the Chinese market, efforts shall be made to upgrade the application of private equity investment. The private equity investment, as one of the market behaviors, entails only the GP and LP relationships. In China, both state-owned LP and private-fund LP have engaged in such relationships; they constantly pool investment into the fund shares, while being responsible for post-investment management, determining the earnings, and making an analysis of the effectiveness of exit, thus achieving mutual benefits through the structural fund investment.

Wang Zhongmin gave detailed description through examples; he proposed that as China's largest LP, National Social Security Fund has always been recognized as the high-quality institutional LP by the industry. The fund managers, able to get the investment of social security fund, will not only obtain a considerable, long-term sum of money, but also effectively enhance the influence of GP, which will bring a positive impact upon the upcoming fund raising and investment. On the other hand, the social security fund, along with the fund managers, makes full use of market opportunities, and obtains the qualification of private equity investment, which not only promotes the development of the private market, but also brings considerable returns to the social security fund itself. In the future, thanks to the further decentralization or cancellation of administrative examination and approval, as well as the establishment of the negative inventory system, the innovation of various industries will be on a track of faster pace. The fund-based investment will play an important role in the future, both in terms of the basic pension system and the other social security systems. At the same time, the fund-based investment can also change the way of residents' decentralized financial management, as well as the status quo plagued by too many market retailers. The government-guided fund or the fund partly supported by the public organizations, builds new types of fund to engage in various investment in a mixed manner, which is beneficial to improve the governmental direct investment or subsidy investment in the past, so that the capitalization-based investment will get more space.

In the current investment context, there are many investment concepts in China's private equity market. Therefore, LP shall constitute a truthful and detailed picture of these key points and provide assistance for the development of the real economy. For example, the recent "PPP Mode", namely, Public-Private-Partnership, characterized by the cooperative mode of public and private organizations, encourages private enterprises, private capital and government agencies to make joint efforts in the construction of public infrastructure. For this, on the one hand, every investing entity shall master the essence of the PPP Mode; on the other hand, larger LP investing organizations (especially the government-funded investing institutions) shall get a truthful and detailed picture of the core concepts of PPP Mode. For the PPP Mode, the first and the second P mainly explain the attributes and sources of social capital. The real kernel is the third P, that is, partnership concept, partnership system and partnership structure; of which private equity investment is the best tool to embody the nature of partnership. GP must bear unlimited liabilities, so that the LP fund can be pooled together, as a two-tier structure. On the other hand, at the level of PPP Mode, due to the unlimited liabilities resulting from the nature of partnership, LP must identify those GPs that do their best to minimize the limited liabilities. As a result, all the other capital in China will be willing to engage in PPP Mode through different transactional structures.

In Wang Zhongmin's opinion, the book Private Equity LP, edited by Mr. Lu Yuebing and Mr. Yang Xingxin, has made pioneering efforts to conduct a systematic research on LP, and elaborated the "allocation strategy, investment practice and operation" for LP investors. This book not only conducts a professional analysis on the strategic asset allocation of LP, the selection of fund managers and the driving factor of fund performance, but also gives a comprehensive introduction to the LP investment practice both at home and abroad; besides, the book, combined with LP's team construction, as well as its mode of operation and management, puts forward some suggestions on the opportunities and strategies of China's LP in the future, which are supplemented by a number of special studies and investment-related cases.

Wang Zhongmin proposed that the book Private Equity LP has four luminous points. Firstly, the book used a large text structure to study the global LP, made up for a big gap in the market and had pioneering significance. Secondly, this book not only studied the accumulated theory and practice of global private equity market development, but also explored the practice of typical Chinese guiding funds. Thirdly, this book deeply researched the global framework of the Fund of Funds. Finally, this book analyzed the global governance structure, emerging market conditions and market operations of the secondary market. The four luminous points separately made the systematic full coverage of the world, China, LP as the main line. I believe this book will allow readers to fully understand and get forward-looking thinking of the future of China's LP investors, and help those who are committed to becoming professional institutional investors of private equity industry.