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Growth in sovereign investors’ exposure to China slows as political sensitivities rise
Inflows fall 58 per cent as sovereign wealth funds grow cautious, yet outlook signals selective opportunities ahead, experts say
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Growth in sovereign investors’ exposure to mainland China in 2025 slowed amid rising political sensitivities, but experts said selective opportunities and closer bilateral ties could support the outlook.
The world’s second-largest economy received US$4.3 billion in investments from sovereign wealth funds, public pension funds and central banks, down 58 per cent from US$10.3 billion in 2024, according to Global SWF, which tracks 792 such state-owned investors.
“Sovereign investment activity has become increasingly politicised, which has forced some Western state-owned investors such as Canadian and European funds to reduce exposures and avoid major deals in China,” Diego Lopez, founder and managing director of the data platform, told the Post.
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Diversification away from developed markets had propped up ventures into China in 2024, but an absence of major deals in 2025 disrupted the goal, Lopez said. He added that the drop was surprising, as Chinese sovereign wealth funds continued to grow in size and cement relationships with their counterparts in the Gulf.
In 2025, the biggest inflows came from Singapore’s Temasek, with US$1.3 billion, followed by Abu Dhabi’s Mubadala Investment and the Qatar Investment Authority, according to Lopez.
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“Tech geopolitics is a major factor for the 2025 drop in China’s sovereign deal volume from sovereign wealth funds and other state investors,” said Winston Ma, an adjunct professor at New York University School of Law and former head of North America for China Investment Corporation, the country’s sovereign wealth fund.
“As government-affiliated investors, the sovereign wealth funds were inevitably cautious about geopolitical risks, at a time when some Chinese tech start-ups were already on the US sanctions list in their early years,” he said.
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