Chinese sovereign wealth funds and state-backed investors, including China Investment Corporation (CIC), are scaling back commitments to US private equity funds, in a further sign of strained financial ties between Washington and Beijing, according to a report by the Financial Times.
Multiple senior private equity executives have reported Chinese institutions have paused new fund allocations to US-headquartered private capital firms, and in some cases are withdrawing from planned investments where commitments had not yet been finalised.
The retrenchment comes under direct pressure from the Chinese government, sources confirmed, as China absorbs the impact of newly imposed US tariffs – some reaching as high as 145% – and retaliatory measures from Beijing.
Several executives noted that Chinese investors are also seeking to avoid exposure to US-based portfolio companies, even through non-US GP structures, indicating a broader strategic shift.
As well as CIC, the reports cites unnamed individuals familiar with the matter as confirming that other major Chinese state-backed entities have also reduced their US private equity activity, a notable reversal after decades of heavy investment into American buyout firms including Blackstone, Carlyle, and TPG.
Although CIC’s US private equity deployment had already slowed in recent years as it diversified across markets including the UK, France, Saudi Arabia, Japan, and Italy, the current climate has reportedly accelerated the trend.
Data from Global SWF show that as of 2023, alternatives accounted for approximately a quarter of CIC’s $1.35tn portfolio and SAFE’s $1tn portfolio.
Historically, Chinese sovereign wealth funds have played a pivotal role in the ascent of US private equity, contributing significant capital to firms across the buyout, infrastructure, and growth equity segments. CIC alone previously held an equity stake in Blackstone, which it divested in 2018.
Despite growing regulatory barriers aimed at curtailing direct Chinese investment into sensitive sectors in the West, participation via private equity fund commitments had remained a critical channel for deploying Chinese capital into Western economies.
Major US managers such as Thoma Bravo, Vista Equity Partners, Global Infrastructure Partners (now part of BlackRock), and others have historically received backing from Chinese institutions, according to public filings and people familiar with the matter.
Industry sources suggest that global geopolitical tensions are prompting not only Chinese investors but also Canadian and European LPs to reconsider US fund allocations.
