AsianFin -- China’s largest asset managers are racing to roll out new performance-linked products following a landmark regulatory overhaul aimed at reshaping the country’s $4.5 trillion mutual fund industry.

In response to sweeping reforms unveiled this month, firms including China Asset Management (ChinaAMC), China Merchants Fund, and E Fund Management have announced plans to launch so-called variable-fee funds—products where management fees fluctuate based on investment performance.

Currently rare in China, variable-fee structures are designed to better align fund managers’ incentives with investor outcomes. Fees rise when funds outperform and drop during underperformance, a model widely adopted in global markets but still nascent in China.

The reforms—described by China Securities Regulatory Commission Chairman Wu Qing as promoting “Warren Buffett-style” long-term value investing—mark the most significant shake-up to China's mutual fund landscape in decades. The new framework is expected to redirect capital flows in domestic equity markets and push managers toward higher-quality, longer-term strategies.