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A few weeks ago, Stephen A. Schwarzman, the chairman of the Blackstone Group, the world’s biggest private equity firm, signed a joint venture here with Shanghai’s municipal government, creating the first Blackstone fund denominated entirely in Chinese currency.
The $732 million fund was the latest example of two trends: global private equity firms seeking to raise capital from increasingly wealthy Chinese individuals and institutions, and the growing international stature of the Chinese currency, formally known as the renminbi.
Chinese private equity funds are emerging in big cities as China promulgates new regulations aimed at creating a homegrown private equity industry, one that Beijing hopes will strengthen the country’s capital markets and fuel private sector growth in an economy overly dependent on government investment.
Industry experts say that to compete with China’s growing funds, global firms like Blackstone [ BX 12.48 
+0.00 (+0.00%) ], the Carlyle Group and even the buyout firm Kohlberg Kravis Roberts are scrambling to form funds denominated in renminbi. Analysts say it has suddenly become the currency of choice for private equity firms operating in China.
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