The Greater China private capital market, encompassing mainland China, Hong Kong, Macau, and Taiwan, experienced a continued slowdown in investment activity in the first half of 2025, driven by macroeconomic pressures, geopolitical uncertainties, and global capital reallocation.
According to PitchBook s 2025 Greater China Private Capital update, private equity and venture capital activities declined, yet sectors like artificial intelligence and Hong Kong’s IPO market showed signs of recovery.
The report highlights that, despite challenges, investors are pivoting toward technology and manufacturing sectors aligned with national priorities to capture structural opportunities.
In mainland China, VC deal volume reached 2,320 transactions in H1 2025, with a total deal value of $5.7 billion—the lowest quarterly figure since 2019.
Full-year VC deal counts are projected to fall further from 2024 levels. PE activity was equally subdued, with only 86 deals completed in H1, compared to 279 for all of 2024.
According to the PitchBook report, this slowdown reflects uneven economic recovery: GDP grew 5.4% in Q1 and 5.2% in Q2, but reliance on short-term stimulus, weak consumer confidence, and export pressures persisted.
Geopolitical risks, particularly U.S.-China tensions, curtailed cross-border investments.
Dollar-denominated funds, historically reliant on U.S. limited partners (LPs), faced significant fundraising challenges, with global capital increasingly flowing to more stable markets like India, Japan, and Vietnam.
Regionally, mainland China remains the largest and most mature private capital hub among emerging markets, but investor activity has waned.
VC and PE deal volumes dropped sharply, with foreign investor participation hitting a low: H1 2025 saw just 112 VC deals, down from a 2021 peak of 1,157.
Hong Kong, however, emerged as a bright spot. After years of market stagnation, 2025 showed recovery signals.
The Hang Seng Index rose over 20% in H1, driven by mainland investors reevaluating Hong Kong’s undervalued stocks.
High-net-worth individuals increasingly allocated capital to private credit and hedge funds.
In February 2025, the Hong Kong SFC issued guidance supporting the listing of closed-end alternative funds and extended tax exemptions to private credit.
The government aims to attract 200 family offices by year-end, targeting HK$100 billion in investments to reinforce Hong Kong’s status as a global financial hub.
Taiwan and Macau’s private capital markets remain small and localized. Taiwan recorded no PE deals in H1 2025, down from two in 2024, while VC deals fell from 58 in 2024 to 14 in H1 2025, impacted by cross-strait tensions and trade policy uncertainties.
Still, AI is a prioritized sector, projected to generate NT$15 trillion in value by 2040.
Taiwan’s new leader, Lai Ching-te, proposed a sovereign wealth fund to support global expansion.
Macau’s market, accounting for less than 1% of activity, saw negligible deal flow.
By sector, VC deal volume was led by B2B (33.4%), IT hardware (20.9%), and software (14.4%), with IT hardware dominating deal value (40.9%).
AI and robotics were standout performers: in the first two months of 2025, humanoid robotics startups secured 20 deals worth $276 million, with companies like UBTech and Unitree leading the charge.
This reflects investor focus on state-backed tech sectors.
Early-stage VC deals accounted for 48.2% of deal volume, with a growing share of deal value, indicating a preference for smaller, early-stage bets.
Median pre-money valuations and deal sizes continued to decline, with the median time between funding rounds slightly improving from 1.21 years in 2024 to 1.15 years in 2025.
PE deals concentrated on B2B (advanced manufacturing, automation, green logistics), IT (AI infrastructure, semiconductors, cybersecurity), and B2C (luxury brands, health, cross-border e-commerce).
Growth/expansion capital dominated deal types, with growth and buyout/LBO deals leading in value, while add-on acquisitions were less common.
Large deals over $100 million remained scarce.
Exits were weak, with VC and PE exit values and volumes below historical averages. PE exits relied on IPOs and M&A, but controlling-asset listings were rare.
Hong Kong’s IPO market offered a positive note, with over 200 listing applications pending and the Hang Seng China Enterprises Index up over 50% since early 2024.
Fundraising remained challenging, with dollar funds facing LP withdrawals and local RMB funds navigating tighter regulations.
To recap, while the Greater China private capital market faces headwinds in 2025, technology-driven opportunities in AI, manufacturing, and green sectors offer potential.
Investors should adopt diversified strategies, leveraging Hong Kong’s financial recovery and Taiwan’s AI strategies to navigate uncertainties and potentially drive long-term value.