China’s venture capital investments are increasingly focused on technology sectors aligned with government policies, such as AI and semiconductors. Despite an overall funding plunge, China contributed 90% of global venture capital investments in the chip sector last year, reaching US$22.2 billion, more than double the previous year.
State-backed investors are playing a growing role in private market funding in China, participating in about 60 of the 100 largest deals from 2021 to June this year. AI and clean technology sectors also saw significant investments, with AI firms in China raising US$5.6 billion in the first half of 2024.
Despite growth in key sectors, private investments are hindered by geopolitical tensions, high interest rates, and a lack of exit pathways. Private firms in Greater China raised US$12.3 billion in the first three months of the year, a 42% decrease from the previous quarter.
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