An increasing number of sovereign wealth funds (SWFs) are renewing their interest in China, signifying a shift of sentiment towards the world’s second-largest economy, a recent survey published by US-based asset manager Invesco shows.
Sovereign wealth investors, including central banks, have cited attractive local returns, diversification benefits, and China’s accelerating leadership in critical technologies as compelling reasons to engage, per the survey.
A significant majority of SWFs (59%) are expected to increase their China allocations over the next five years—APAC-based and Africa-based sovereign investors lead the rankings. Sovereign investors based in North America, too, show high interest towards growing their China allocation, signifying their willingness to look beyond the current geopolitical tensions.
The number of sovereign wealth investors opting out of China in its emerging market priority list stood at 41 in 2025, down 26.8% compared to 56 recorded in 2024. Meanwhile, more sovereign investors are prioritising China with a total of 59 selecting high priority and moderate priority, 13.6% more than 2024’s 44.
As the exuberance of markets like Japan and India continues to grow and news headlines are dominated by the ongoing trade uncertainty and geopolitical tensions, sovereign investors have selectively recalibrated their China exposure.
Public equities are the most preferred approach for accessing Chinese markets (64%), followed by private market investments (49%) and multinationals with China exposure (24%). Corporate bonds and government bonds were the two least preferred, accounting for 22% and 20% of the split respectively, per the survey.
Sovereign investors are viewing China’s innovation systems as a diversification away from developed market tech concentration, especially in relation to US mega-cap exposure. Many of them believe there is a strategic urgency to engage with China’s innovation-driven sectors, much like the focus they once placed on Silicon Valley.
The survey, conducted by NMG Consulting between January and March 2025, interviewed a total of 141 organisations including 83 SWFs and 58 central banks.
