Chinese state-backed investors are significantly scaling back their involvement in U.S. private equity, citing mounting political tensions between Beijing and Washington. With tariffs exceeding 120% on goods from both nations, Chinese sovereign wealth funds are pulling out of new investments in American private capital firms.
Seven senior executives from major private equity firms confirmed the move, with three attributing it directly to Chinese government directives. Some funds are even requesting to be excluded from transactions involving U.S. assets—even if those deals are facilitated through international firms not based in the U.S.
Major Players Step Back
One of the most prominent entities reducing its U.S. exposure is China Investment Corporation (CIC). According to sources familiar with the matter, CIC and other major funds have been gradually withdrawing from American markets since 2023. Instead, they’re redirecting investments toward Europe, Asia, and the Middle East—forming new partnerships in countries like the UK, France, Italy, Japan, and Saudi Arabia.
Chinese sovereign funds have historically been major supporters of top-tier U.S. private equity groups such as Blackstone, TPG, and Carlyle. Their capital played a key role in expanding the private equity industry, which now manages an estimated $4.7 trillion in global assets.
As of 2023, both CIC and the State Administration of Foreign Exchange (SAFE) had about 25% of their respective $1.35 trillion and $1 trillion portfolios allocated to alternative investments, according to consultancy Global SWF.
Regulatory Tensions Deepen
Chinese fund managers argue that growing Western regulatory scrutiny is creating an unwelcoming environment. Governments in the U.S. and Europe are increasingly blocking Chinese capital from entering critical sectors like infrastructure and technology—often on grounds of national security.
While Chinese investors had previously used private equity as a backdoor into American markets without drawing political attention, even those indirect channels are now facing resistance.
Adding to the pressure, Canadian and European pension funds—traditionally strong backers of U.S. private equity—are also reassessing their exposure due to the increasingly volatile global political climate. Blackstone President Jonathan Gray acknowledged during a recent earnings call that investors are raising concerns about the ongoing trade and tariff disputes.
China Tightens Grip on Critical Mineral Exports
Parallel to its financial pivot, Beijing has also clamped down on exports of key strategic minerals. Since 2023, China has placed tighter controls on materials like antimony, germanium, and gallium—essential components in semiconductors, renewable energy systems, and military technology.
In December, China officially banned exports of these minerals to the U.S., anticipating aggressive trade policies under President Donald Trump. In the first quarter of 2025, exports of antimony and germanium fell by 57% and 39%, respectively, while gallium exports hit their lowest level since October 2023.
