Unlike US and EU markets where typical concerns about private equity are excessive leverage, systemic risk and short-termism, the recent market concerns in China have centered around illicit fundraising activities and misappropriation of funds. The evidence of market failure in China challenges conventional views that private equity is a highly competitive market involving sophisticated investors and hence the relationship between managers (general partners) and investors (limited partners) requires no regulatory attention. By studying a hand-collected dataset of seventy Chinese private equity limited partnership agreements, this article finds that contractual designs on partners' duties fail to effectively constrain misconduct by general partners. Although Chinese regulators are strengthening the regulation of the private equity sector to address managerial abuse, most measures are piecemeal and in the form of temporary provisions. There is no equivalent concept of equitable fiduciary duties in Chinese partnership law and the statutory provisions imposing duties on partners are wholly inadequate. Also, the attempts to rely on administrative measures and self-regulation by the relevant bodies to plug the gaps have also proven to be ineffective. Therefore, I advocate that the regulatory focus should be on the fund managers and, consequently, specific statutory duties should be imposed on them to enhance investor protection to respond to an ever-changing industry.