China's private capital will play a major role in the country's fixed-asset investment over the next eight years, reaching 80 percent among the total figure, a researcher with a government think tank said.

"From 2013 to 2020, China's annual investment growth rate will be around 18 percent, which cannot be completed without private investors," Bao Yujun, president of the China Private Enterprises Research Association, said on Saturday during the private sector roundtable of the Boao Forum for Asia Annual Conference, held in Hainan province.

China aims to double its GDP and average per capita income by 2020 compared with the level in 2010, which has given private companies precious business opportunities along with challenges, Bao said.

By the end of last year, the number of Chinese private companies reached 10.85 million with a total registered capital of more than 31 trillion yuan ($5 trillion), according to the association.

In 2012, investment from private companies accounted for more than 61 percent of the total fixed-asset investment.

As China's private companies grow stronger, they are eyeing overseas expansion and becoming more active in international mergers and acquisitions.

The majority of outbound M&A activities take place in the Chinese private sector, Lu Boqing, chief executive director of Deloitte Touche Tohmatsu China, said during the roundtable.

For the first three quarters of last year, there were more outbound M&A deals from Chinese private companies than State-owned ones, Lu said.

"Those private investors are mainly focusing on European and US markets, aiming at acquiring technologies, building brands and expanding overseas marketing channels through M&A," he said.

In overseas M&A markets, private companies have more advantages than State-owned ones in energy and resources industries because they are more accepted in foreign countries, said Shen Nanpeng, founding and managing partner of Sequoia Capital China.

He predicted the wireless Internet, medical services and financial services sectors will have huge potential for Chinese private investors in the future.

He also pointed out that the percentage of Chinese companies' investment in the research and development sector is much lower than in US companies.

According to a survey of around 40 Chinese private companies' leaders during the roundtable, the top three M&A target industries they are interested in over the next three years are technological telecommunication, consumer goods manufacturing and medical treatment.

In terms of outbound M&A opportunities, Chinese private companies are targeting modern agriculture and real estate.

The top two biggest challenges for private investors are a lack of knowledge of laws and regulations in overseas countries and the integration process after the transactions, the survey found.

"Companies should focus on businesses they are familiar with," Li Jian'ge, vice-chairman of Central Huijin Investment Co Ltd, said during the roundtable. "It is a good choice for some companies to go overseas while it is not for some others. Companies in certain industries such as customer goods should keep making efforts in the domestic market," he said. "However, all of the companies should think globally even if they don't expand to the international market."

He said private investors should make decisions based on market changes rather than government policies, which may lead to overcapacity issues in industries.

"Financing and technological innovation are the top two challenges for most private companies," he said. "Meanwhile, local governments should improve their credibility to protect the rights of private businesses."

To help with the development of private companies, the government needs to be more open to private investors. China should abandon the investment approval procedure, said Zhang Weiying, professor of economics and director of the Center for Market and Network Economy at Peking University.

"Government officials should not be the investment decision-maker. It is the entrepreneurs that should play that role," he said.