Carlyle Group's latest investment in China doesn't involve writing a cheque. Instead, the Washington-based private-equity firm is investing in a relationship with a local government that it hopes will turn into a pipeline of deals.

Carlyle has signed a memorandum of understanding, to be announced Wednesday, with the government of Shandong province. Carlyle says the relationship will give it the first look at deals in China's number two province by economic output, after Guangdong. The coastal province of Shandong, south of Beijing, is a powerhouse in industries ranging from chemicals to household appliances to beer.