Mutual fund performance in China was studied to see if professional fund managers have an edge in a market dominated by retail trading. Exceptional funds with persistent performance were identified using a new skill measure. Funds in the top 1% for 6 months had a 22% chance of being in the top 10% in the following period, showing some skill. Funds in the top 1% for past returns had only a 12% chance of being top performers in the next 6 months, suggesting less skill. The study also found declining skill and performance persistence in the industry, likely due to fund managers moving to hedge funds. Most outperforming funds in China use market timing to deliver excess performance, rather than picking winning stocks. This is because the mutual fund management culture in China focuses on market timing for managing risk, rather than on relative performance.