Who said private equity and China don’t mix? Senior executives from Goldman Sachs and Temasek last week quit their existing roles to set up independent, China-focused private equity funds.

The moves underscore rising interest in renminbi-denominated funds. According to the Centre for Asia Private Equity Research, since 2006 Beijing has approved the creation of 11 local currency funds with a combined war chest of $10.6bn. The politics are sound. Nationalists will rejoice that deeper-pocketed local private equity firms can compete for domestic assets against global giants. And renminbi-denominated private equity funds will help to soak up domestic liquidity. Foreign firms using the greenback will find it more difficult to source deals and secure approvals. The likes of Carlyle and Texas Pacific Group will have to work harder to define their niche.