Although major private equity firms are making record-high investments in other parts of Asia, they are shying away from making new investments in China.
According to an analysis of data from financial transaction firm Dealogic and research institute PitchBook by the
Financial Times, the world’s top 10 private capital firms—including global private equity giants KKR (Kohlberg Kravis Roberts), Warburg Pincus, and Blackstone—did not publicly disclose any new equity investments in China during the first seven months of 2026.
Data from these two research firms shows that back in 2021, these companies still executed approximately 12 deals in China, including early-stage funding mainly for supporting startups. However, there were only 3 private equity investments last year, and merely 2 in 2024.
While private equity activity in China cools, international firms are channeling unprecedented capital into the broader Asian region, highlighted by EQT’s historic $15.6 billion Asia-Pacific buyout fund—the largest ever raised for the region—and Blackstone’s $13.1 billion Asia fund close in June.
Investing in China was once a prerequisite for global competition, but the landscape has changed dramatically over the past few years.
As confidence in China’s political and economic prospects wanes, Beijing’s intensified scrutiny—including the National Security Law, Anti-Espionage Law, and data security regulations—has heightened compliance costs and operational risks, further worsening the slump in Chinese deal-making.
A case in point is export controls on technology, AI, and sensitive data: U.S. tech giant Meta proposed to acquire Manus—an AI startup founded by two Chinese post-90s entrepreneurs, Xiao Hong and Ji Yichao—for approximately $2 billion.
However, regulatory authorities such as the NDRC launched an investigation into whether the deal violated rules governing foreign and outbound investment, ultimately blocking the foreign acquisition and ordering the transaction canceled. Founders Xiao Hong and Ji Yichao were questioned in Beijing and placed under exit bans.
Similarly, Hong Kong's CK Hutchison Holdings originally
planned to sell its global port portfolio, covering 43 ports across 23 countries (including critical ports at both ends of the Panama Canal), to a consortium led by American firm BlackRock/GIP for $22.8 billion. This directly angered Beijing. In the end, the deal structure was forced to adjust, introducing a Chinese state-owned enterprise as a shareholder to dilute the U.S. firm's control.
The Financial Times previously
reported that due to weak demand, a sluggish Chinese economy, and a diminishing pool of Western investors, the world’s top 10 private equity funds find themselves trapped in China, unable to divest and cash out of their Chinese investments for the second consecutive year.
David Solomon, Chairman and CEO of Goldman Sachs,
noted at the Global Financial Leaders' Investment Summit in Hong Kong in November 2024 that repatriating capital out of China over the past five years had been extremely difficult, leaving global investors in a wait-and-see posture regarding Chinese investments.
Wang He, a columnist for The Epoch Times,
observed: "The Chinese Communist Party does not operate a capital-open market, so capital inflows and outflows are strictly controlled by the state. These private equity funds lack exit channels and find their capital locked in."
Economists also point out that the predicament faced by private equity funds offers a window into the future trajectory of the Chinese economy.
William Yu, an economist at the University of California, Los Angeles,
said: "Private enterprises and foreign investors are increasingly disillusioned with China’s economy, driving the record-high capital flight we have witnessed recently. China’s economic performance has been poor in recent years, but the future outlook could be even worse."
