The report also highlighted risks emanating from China’s surging internet and technology sector, often referred to as its new economy.

Bain said that average deal size in that sector increased to $213 million last year, from $30 million in 2013.

“The huge volume of private equity and venture capital flowing into China’s new economy has over­-saturated the lower end of the market, prompting investors to seek larger investments,” the report said.

It also cited difficulties in evaluating Chinese internet and tech start-ups by traditional metrics such as earnings and cash flow.

“The uncertainty hanging over China’s new economy will test the industry’s resilience and creativity,” the report said.

“Nearly two-thirds of Greater China private equity investors we surveyed see a high to very high risk of the speculative bubble bursting in the coming years,” it added.

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