China Rolls Back US Private Equity Investments

Chinese state-backed funds have halted new investments in the US private equity sector, according to several people familiar with the matter, in the latest escalation by China in President Donald Trump’s trade war.

Seven sources from private equity firms said the funds have begun withdrawing investments from funds managed by US private equity firms in recent weeks, according to the Financial Times. Three of the people familiar with the matter attributed the move to pressure from the Chinese government.

Some executives added that some Chinese funds are also seeking to exclude themselves from any investments in US companies, even if those investments are made through non-US acquisition groups.

These shifts in investment orientation toward the US come as China faces the brunt of US tariffs imposed over the past three weeks, which threaten to significantly reduce trade between the world’s two largest economies.

President Trump imposed new tariffs of up to 145% on Chinese imports, while Beijing retaliated with a 125% tariff. Several buyout firm officials confirmed that Chinese investors have changed their attitude toward the US private equity market since the start of the trade war and will no longer make any new financing commitments to US companies.