China PE industry seen surging on SMEs, Taiwan targets

* China's domestic PE industry seen at 10X its current size

* China's PE firms to fund China's small to mid-sized firms

* Taiwan services sector also seen as target for China PE

* China's SME seen in favour of local PE funds

By Faith Hung

TAIPEI, Nov 4 (Reuters) - China's homegrown private equity industry could grow to 10 times its current size in the next few years as domestic firms fund SMEs, allowing China's PE firms to better compete in a market long-dominated by global giants, industry executives said on Wednesday.

The mainland's private equity industry -- still in its infancy only three years ago -- could grow to $1 trillion Chinese yuan ($147 billion) over the next five years from less than $100 billion yuan now, Katherine Wang, chairwoman of Power Capital Corp, said at a conference in Taipei.

"One major policy the government has taken is to encourage PE funds by giving them tax incentives from their investments," said Wang, who runs a Beijing-based $2 billion yuan fund.

"Chinese PEs would be able to compete head to head with foreign firms like Carlyle [CYL.UL], TPG Capital [TPG.UL] and Softbank (9984.T: Quote, Profile, Research) over the next five years," she told reporters.