The Swiss bank is keen to expand its operations in the country and is in preliminary talks with the Beijing municipal government about setting up a renminbi-denominated fund, reports the Financial Times.
Setting up funds based on local currency in China is becoming more popular for global financial institutions due to more restrictive regulations imposed on private equity units using foreign currency.
An insider apparently close to the talks between UBS and the Chinese authorities said: "The discussion is over how this fund is run and who puts what money in."
Earlier this month, Reuters reported that JPMorgan is also set to expand its operations in China.
An unnamed source said that a memorandum of understanding has been signed between the bank and First Capital Securities in regards to setting up a joint securities venture in the Asian country.
By Claire Archer