China Investment Corp., the nation’s $1.3 trillion sovereign wealth fund, is cutting exposure in U.S. private markets to curb risks as an escalating trade war between the world’s two largest economies threatens its investments, according to people with knowledge of the matter.
The Beijing-based fund is planning to reduce holdings in U.S. private assets, which may include real estate and infrastructure in addition to private equity, said the people, who declined to be identified as the considerations are private. The company has already started seeking buyers for about $1 billion in private equity investments managed by U.S. firms, they added.
President Donald Trump’s global tariffs and repeated efforts to interfere with the Federal Reserve’s monetary policy have hammered U.S. stocks and Treasuries, and shaken the pillars of American financial hegemony and global investor confidence. CIC joins endowment funds including Harvard University’s in seeking to trim illiquid holdings, adding pressures on U.S. assets as the world’s largest economy faces the growing prospects of a recession.
CIC didn’t reply to an emailed request seeking comment. Reuters reported earlier on the plan to sell private equity investments held in funds run by eight managers, including Carlyle Group and Blackstone.
The risks facing Chinese sovereign investors’ U.S. assets have risen this year as a tit-for-tat trade war between the two countries intensifies, prompting CIC to reduce its exposure in private assets as any exit takes more time than selling in public markets, the people said.
While the fund doesn’t disclose private market assets by country, the U.S. accounted for 60% of public stock holdings in CIC’s overseas investments as of the end of 2023, according to its latest annual report. Alternative assets, which include private equity, private debt, real estate and infrastructure, made up 48% of the portfolio.
It’s unclear what the targets of the reductions are, the people said.
Harvard’s endowment is in advanced talks to sell about $1 billion of private equity stakes as the oldest and richest U.S. university faces financial uncertainty amid Trump’s threats and a sluggish market for illiquid assets, Bloomberg reported last week. Yale University’s fund was also exploring such sales.
