This would not happen in the U.S., or most other places for that matter. But China is China, and the rules there are different. Goldman Sachs (NYSE: GS)'s "China partner, Fang Fenglei, is moving forward with plans to set up a private-equity fund that could complicate his relationship with Goldman as both hunt for investments in China," according to The Wall Street Journal. Fang will probably get to keep his title as chairman of the investment banking joint venture, Goldman Sachs Gao Hua Securities.

But why? Feng is about to take dollars out of Goldman's pockets. Feng's new fund will be partners with an investment arm of the Chinese government. Who is going to get first look at the best deal, Goldman or a fund run by the locals? The Journal points out that insiders already have an advantage. "Foreign private-equity investors have found their ability to close deals hampered amid booming Chinese stock prices and mounting concern within China about foreigners buying into important industrial assets."

Yes, the Chinese want to keep the best part of the steak for themselves. It is a closed system, so it can do that. But Goldman does not have to make it easier.

Douglas A. McIntyre is an editor at 247wallst.com.

Goldman Sachs now competing with partner in China originally appeared on BloggingStocks on Fri, 30 Nov 2007 11:55:00 EST. Please see our terms for use of feeds.