Beijing is looking to host some of the world’s biggest investors next week for a rare meeting aimed at encouraging foreigners to keep investing in the slowing economy.
Large foreign and domestic fund managers such as private equity (PE) firms, known as general partners (GPs), and their investors or limited partners (LPs) including sovereign wealth funds and pension funds are expected to join the meeting, sources with direct knowledge of the matter said.
The meeting, set for next Friday, will focus on the current conditions of US dollar-denominated investment firms in China and the main challenges they face, sources said and invitation documents showed.
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Participants will also be encouraged to provide suggestions to help address challenges facing their businesses in China and share their outlook on the economy, according to the sources and documents.
The gathering comes at a time when global investors and banks are warning that confidence is waning in the outlook for the world’s second largest economy.
China’s recovery from its stringent Covid curbs is dwindling after an initially strong rebound. Its economy grew just 3% in 2022, one of its worst showings in decades.
Investments in China are also becoming increasingly risky due to tensions with the United States over Taiwan, a deepening tech and trade war and Beijing’s state-led industrial policies.
‘Charm offensive’
China’s policies including security crackdowns, its harsh regulation of the tech industry and close monitoring of foreigners are convincing many global companies to steer clear of the country, Andrew Collier, managing director at Hong Kong-based Orient Capital Research, said.
“Now that the economy is drastically slowing there is a new charm offensive to convince foreigners to come back,” he said, adding the measures might come “too little, too late”.
Such a meeting, with a clear agenda to discuss challenges facing global fund managers investing in China, is rare, the three sources said, and reflected Beijing’s keenness to shore up confidence among foreign investors.
Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), the country’s securities regulator, will address the attendees, according to two of the sources.
The global funds which will attend will likely send their China-based senior staff, though some senior executives will be flying to China for the talks, the sources added.
Bruised returns
The meeting also comes as some PE firms and their investors have been rethinking their China strategies after a years-long, bruising crackdown on private enterprises such as tech companies.
The regulatory crackdown, that wiped $1.1 trillion off China’s biggest technology firms, cast a long shadow over PE investors’ return prospects and narrowed investment opportunities, sources said.
Canada’s third largest pension fund, Ontario Teachers’ Pension Plan, said in January it was pausing future direct investments in private assets in China.
Months of disappointing economic data has MSCI’s China share index down 2% on the year, against a 15% gain for world stocks. Meanwhile, the yuan is hovering at 8-month lows, pushing some investors to close up their China strategies.
Regulatory reprieves
US dollar-denominated fundraising by China-focused venture capital and PE firms this year also had its weakest first half year in the past decade, data from industry tracker Preqin showed.
China-focused GPs only raised $5.5 billion in US dollar-denominated funding in the first half of the year, Preqin data showed, a far cry from its peak of $27.6 billion raised in the same period in 2021.
The meeting, organised by China’s fund regulator Asset Management Association of China, follows signals from authorities last week that the tech crackdown, which began in late 2020, had ended with fines recently on Ant Group and Tencent.
In another strong signal that the crackdown is over, Premier Li Qiang on Wednesday met firms such as Alibaba’s cloud unit and Meituan, and urged them to do more to support China’s economy.
- Reuters, with additional editing by Vishakha Saxena
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