Ten of the world's largest private equity firms, including KKR, Warburg Pincus, and Blackstone, have made zero new publicly disclosed equity investments in mainland China during the first seven months of 2026, according to FT analysis of Dealogic and PitchBook data. This marks a sharp decline from three deals in 2025, two in 2024, and roughly a dozen in 2021.

Beijing's tightened scrutiny of foreign investment in sensitive sectors like AI has deterred dealmaking. Authorities blocked Meta's $2bn acquisition of China-founded AI startup Manus in April and delayed CK Hutchison's port sale to a BlackRock-led consortium. Limited partners are wary of geopolitical risk and shifting tax enforcement, with one industry executive noting the "juice may not be worth the squeeze."

The same ten firms recorded zero complete divestments from Chinese portfolio companies in 2025 amid slowing growth and high US rates. Meanwhile, record Asia-focused funds are targeting Japan, India, and Australia — EQT closed a $15.6bn fund and Blackstone a $13.1bn fund — with China allocations around 10%.

Some optimism persists after a May meeting between Trump and Xi Jinping eased tensions. Advisers note valuations have fallen, creating potential opportunities outside sensitive sectors, though geopolitical issues now dominate investment analysis.