China has been advised by the UK government on how to establish a thriving private equity industry, with the Treasury passing papers on tax and regulation to Beijing as London seeks a strategic advantage over the US.

The advice, coupled with discussions between top UK buy-out executives and Beijing officials, may give London a head start in the tussle with New York for influence in China, widely seen as private equity's next Eldorado.

“The Chinese are very keen to develop a domestic market,” said Dag Detter, senior advisor to Terra Firma, the UK buy-out firm, who has worked with the Chinese government on private equity.

“Their leadership rightly believes that doing so would further stimulate growth and strengthen the country's business sector, and the UK's participants are happy to help,” said Mr Detter.

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