Qing Xu, Managing Partner at Oriza FOFs, said there is a promising economic outlook for China as global investors regain confidence despite geopolitical challenges. She identified artificial intelligence, healthcare, and sustainable development as key sectors poised for growth, indicating a transition in China's capital market toward value-driven investments.
According to insights from industry experts featured in Preqin's 2024 Greater China Private Equity and Venture Capital Benchmark Factsheet, China’s capital market is returning to the essence of value investment, particularly in strategic emerging industries such as technological innovation, new energy, advanced manufacturing, and artificial intelligence, which offer significant growth opportunities.
“We believe that China's capital market is returning to the essence of value investment. In terms of industries, strategic emerging industries such as technological innovation, new energy, advanced manufacturing, and AI offer greater opportunities for future growth,”Xu said. “In terms of stages, China's private equity market has gradually developed to the two ends of the early stage and M&A. We believe the M&A market will become more active.”
Xu emphasized that global investors are beginning to show renewed interest in China's private equity and venture capital sectors. Despite recent economic uncertainty and geopolitical tensions, strategic investment opportunities are emerging in the manufacturing, consumer, and technology sectors.
“Due to the complex and volatile global financial market, geopolitical uncertainties, and other factors, global investors have upgraded their risk aversion over the past two years and are cautious when looking at Chinese assets,” Xu said.
“However, we have seen a resurgence of global investor interest and confidence in Chinese assets this year, with the further stabilization of China's economic recovery and positive policies in various aspects of its financial market and regulation. In particular, China's capital market has experienced an industry reshuffle, making the valuation of Chinese assets relatively attractive. China is a unique and huge market with world-class infrastructure and a complete industrial system − that’s why wise investors will not ignore the Chinese market in their global asset allocation.”
Xu identifies digitalization, intelligence, and globalization as key drivers of future opportunities, with artificial intelligence (AI) being a major catalyst for technological transformation. She emphasizes sectors such as healthcare, business-to-business services, and ESG initiatives like green development as integral to China’s long-term economic vision. Additionally, she advises investors to adapt to China’s evolving valuation landscape, noting a shift toward a value-driven investment model, particularly in technological innovation, new energy, and advanced manufacturing.
When it comes to tailoring investment strategies to align with local valuation expectations, Xu emphasizes that different capital markets have unique characteristics and rules, with variations in investor structure, investment logic, and valuation preferences.
“As investors, we should recognize the value assessment systems of different markets and make reasonable arrangements and expectations for the assets we allocate,” Xu said.
Qing Xu is the Managing Partner at Oriza FOFs. With a Bachelor of Laws from Fudan University and a Master of Management from Xi'an Jiaotong University, she has over 19 years of investment management experience, leading teams in the establishment and management of multiple mother funds since 2006. Xu is recognized for her deep understanding of China's venture capital market and her commitment to fostering industrial upgrading and innovation, particularly in the technology and healthcare sectors.