China Pulls Out of U.S. Private Equity Deals Amid Trade War Tensions

China is stepping back from new investments in U.S. private equity firms as tensions rise between Beijing and Washington. According to sources familiar with the matter, Chinese state-backed funds are now under pressure from their government to avoid putting money into American financial companies.

This move is part of China’s broader response to the ongoing trade war with the U.S., especially after the recent tariff hikes. The U.S. has raised tariffs up to 145% on some Chinese goods, and in return, China has slapped its own tariffs as high as 125%.

As a result, major sovereign funds like China Investment Corporation (CIC) are pulling out of previously planned investments. Even if the private equity deals are managed by non-American firms, they are being avoided if there’s any U.S. connection. This signals a major shift in strategy.

In the past, Chinese funds were strong financial supporters of well-known American private equity firms like Blackstone, TPG, and Carlyle. But now, they are redirecting their capital toward safer and more politically neutral markets like the UK, Saudi Arabia, and Japan.

This geopolitical tension is not just affecting Chinese investors. Even large pension funds in Canada and Europe are reportedly rethinking how much they want to invest in the U.S., given the growing uncertainty.

The changes are likely to impact global investment flows and could make it harder for U.S.-based private equity firms to raise money from foreign investors. Experts say this could be just the beginning of a larger shift in global financial alliances, driven by rising political risks.

In Summary:

China’s government is pressuring state-backed funds to stop investing in U.S. private equity.

CIC and others are pulling out of American deals, even if managed by non-U.S. firms.

This is a response to U.S. tariffs up to 145%, with China retaliating with 125% tariffs.

China is now sending money to markets like the UK, Saudi Arabia, and Japan.

Canadian and European funds are also becoming cautious about U.S. exposure.

China Warns of Retaliation Against Deals That Undermine Its Interests