Policymakers have set the tone for private capital to invest in State monopoly industries, but conflicts of interest may still get in the way, analysts said Tuesday.

Private investors can now participate in sectors like public works projects, new energy, resource exploration, financial services, national defense, education, and social welfare projects, all of which were traditionally controlled by State-owned enterprises.

The new rules are a supplement of the State Council's guidelines on encouraging investment in the country's monopoly sectors released in May.

Anywhere from 600 to 800 billion yuan ($88.50-$118.01 billion) in private capital is sitting around here in Wenzhou, looking for investment opportunities, said Zhou Dewen, president of the Wenzhou-based Small- and Medium-Sized Enterprises Association.

"Our local entrepreneurs are enthusiastic in investing in high-return industries such as financial services and national defense, but there could still be some obstacles," Zhou said.

"What can we do if the local government doesn't approve our participation?" Zhou added that local government may keep the high-return projects for local investors.

Some local governments usually set higher thresholds such as raising the capital requirement for private investors, Zhou said,

He added private micro-credit companies in the financial service sector have been severely restricted.

The key is that private businesses and State-owned enterprises are treated equally, said Liu Shengjun, deputy director of CEIBS Lujiazui International Finance Research Center.

Currently, the overlapping roles of the government as the owner of State-owned enterprises and as the lawmaker creates widespread conflicts of interest.

If a local regulatory body doesn't approve the participation of an individual investor, even if the investor decides to sue the regulator under the anti-trust laws, the court would not accept the case, Liu noted.

"If individual investors could sue regulators, they will be more active in competing against the State-owned enterprises," he said.