Singapore’s sovereign wealth fund, GIC, has significantly reduced its private investing in China, sources told the Financial Times. Reasons include Xi Jinping’s “common prosperity” campaign and fears of other unexpected moves from China’s leadership. While GIC has cut private-equity and VC investments in China, it boosted investment worldwide by 17% last year. Loading Something is loading.
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Despite brightening outlooks brought on by China’s economy reopening from zero-COVID policies, one of the world’s largest sovereign wealth funds has scaled back key investments there.
Singapore’s GIC, which manages around $700 billion, reduced its Chinese private-equity and venture-capital investments over the past year, sources told the Financial Times.
This turn away from the second-largest economy stems from a number of concerns, including fears about policy decisions by China’s leadership.
GIC executives cited growing US-China political tensions, President Xi Jinping’s “common prosperity” campaign to reduce inequality, and fears of unexpected moves from Beijing like its crackdown on the tech sector, the FT reported.
The last three years were marked by a slew of strict regulations on the sector, which China’s leaders deemed to have become too powerful in the country. And Ant Group’s $37 billion IPO that Chinese authorities stopped also hurt GIC.
Meanwhile, the fund has been hit by China’s ongoing real-estate crisis, which Beijing helped bring about by trying to stem excessive borrowing.
And in recent weeks, tensions between the US and China ramped up after a Chinese spy balloon flew over the US in early February.
Despite a three-decade history with China that proved financially beneficial, GIC is reported to have directly invested in just two Chinese companies in 2022, compared to 16 in the year before. Still, the fund’s leadership is not closed off to future investment in China.
And while its position in China has decreased, GIC has expanded its global investments by 17% last year compared to 2021.