Long-term funds turn shy of investing in China: Report

New Delhi: Several long-term investors such as sovereign wealth funds, pension funds and institutional investors are now reluctant to invest in China because they have lost confidence in the Asian giant’s growth story, according to a report in Uganda-based media outlet PML Daily.

The report highlights that for nearly three decades, China was viewed as the world’s most compelling growth narrative. Foreign businesses rushed to establish factories, financial institutions expanded their presence, and investors poured billions into the world’s fastest growing economy. Many analysts even predicted that China would soon overtake the United States as the world’s largest economy.

However, the mood has now changed with some of the world’s largest sovereign wealth funds increasingly putting investments in markets perceived as more predictable, more transparent, and less exposed to structural economic risks.

Concerns surrounding China’s prolonged property crisis continue to weigh heavily on investor sentiment, prompting several major state-backed funds to reduce or delay exposure to Chinese assets, the report observes

It highlights that the real estate sector, which was once one of the main engines driving growth in the Chinese economy, has now turned into a source of uncertainty. Analysts continue to describe the housing downturn as a long-term adjustment rather than a short-lived correction.

At the same time, the article also states that China’s economy is not collapsing, nor is it losing its importance, rather investors appear to be reassessing the balance between opportunity and risk, that reassessment matters because capital is highly sensitive to uncertainty.

It highlights the contrast with the United States. While China struggles to restore confidence in its property market, many sovereign wealth funds are directing billions of dollars toward emerging industries linked to artificial intelligence, digital infrastructure, semiconductors, cloud computing, and advanced technologies.

“The attraction is not simply about technology itself. Investors are gravitating toward environments where they believe innovation, regulation, financial markets, and legal protections provide greater certainty for long-term returns. The growing concentration of sovereign wealth fund investments in a smaller number of trusted markets reflects this changing calculation,” the article observes.

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