Private Equity Optimism Returns to China Amid Tech-Driven Economic Strategy
GerikSummary:
Top Asia-focused private equity leaders have expressed renewed confidence in China’s economic outlook, citing Beijing’s tech-centric five-year plan, surging AI adoption, and portfolio reallocation trends as catalysts for future growth....
A Strategic Pivot Toward China’s Tech Future
At the Global Financial Leaders’ Investment Summit in Hong Kong, leading voices in Asia’s private equity (PE) landscape struck an upbeat tone on China’s growth trajectory. Despite the sector’s subdued performance in recent years, key investors signaled a turning point driven by China’s sharpened focus on artificial intelligence, advanced manufacturing, and technology self-reliance as outlined in its latest five-year plan.
Jean Eric Salata, chairman of EQT Asia, noted that China’s strategic direction promises to deepen its global edge in AI and high-tech industries. He highlighted automation achievements such as Xiaomi’s electric vehicle assembly line, which demonstrates China’s ability to deploy robotics at scale and at low cost. Salata’s bullish outlook extends beyond the mainland, seeing Hong Kong as a key beneficiary of China’s capital and innovation momentum.
AI: The Next Phase of Commercialization
Hillhouse Investment founder Zhang Lei emphasized that China is poised to lead not just in AI development, but more importantly in AI application and commercialization. He credited China’s capacity for rapid product iteration, willingness to experiment with open-source models, and the sheer size of its tech-savvy consumer base. These dynamics, he argued, give Chinese firms an edge in quickly turning AI advancements into scalable solutions.
Fred Hu of Primavera Capital added that China’s engineering depth and massive computing infrastructure will accelerate its AI leadership. He cited China’s electricity capacity more than triple that of the U.S. as an underrated enabler of the AI revolution, especially as power-intensive computing continues to grow.
From Retreat to Reallocation
The private equity sector’s renewed enthusiasm marks a notable reversal from recent caution. U.S.-China geopolitical tensions and tighter regulations had previously driven down deal activity and fundraising. PitchBook data shows that China PE deals collapsed to 93 by Q3 2025 on track for the weakest year in more than a decade. Fund launches have dropped from 144 in 2021 to just 14 so far this year, while capital raised fell sharply to $3.6 billion from $23.6 billion the year before.
But this contraction, instead of signaling abandonment, is now being viewed as a moment of rebalancing. Salata noted that global investors, long overexposed to U.S.-dollar-denominated assets, are diversifying their portfolios opening the door for renewed flows into China and Hong Kong. This reallocation could revitalize fundraising and support a new cycle of tech-focused investments.
The remarks at the Hong Kong summit reflect a growing belief that China’s economic story is not over but entering a new, AI-fueled chapter. As Beijing doubles down on its self-reliance agenda in quantum computing, hydrogen, and semiconductors, private equity firms see an opportunity to align with long-term industrial policy. If capital reallocation trends continue, China may not just regain its appeal it could re-emerge as a dominant force in the next global tech boom.
Source: CNBC
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