Sovereign wealth funds invested $14.2 billion in mainland China and Hong Kong during the first nine months of 2026, nearly 190% more than the $4.9 billion invested throughout 2025, as Middle Eastern funds led a renewed wave of capital into the region.
The rebound, documented in data from Singapore-based consultancy Global SWF provided to CNBC, follows a 54% decline in sovereign wealth fund investments in China and Hong Kong in 2025 compared with the previous year. Geopolitical tensions and concerns about China’s economic outlook had weighed on investor sentiment during that period.
Saudi Arabia’s Public Investment Fund accounted for $6 billion of the latest inflows, followed by the Abu Dhabi Investment Authority, which invested $2.5 billion. Abu Dhabi’s Mubadala invested $800 million, while Qatar Investment Authority contributed $600 million. Together, the four Gulf funds accounted for nearly 70% of sovereign wealth fund investments in China and Hong Kong during the nine-month period.
The renewed activity reflects growing interest in Chinese technology, biotechnology, consumer businesses and advanced manufacturing, as sovereign investors seek opportunities despite continuing geopolitical tensions. Investors are also reassessing the potential of Chinese industries as advances in artificial intelligence increasingly extend beyond frontier models into applications such as robotics and drug discovery.
Jenny Lee, senior managing partner at investment management firm Granite Asia, said the questions investors were asking about China had changed substantially. “I think China has gone from ‘China is not investable’ to ‘is China investable?’ to today, the most common question I get is: ‘are we missing out?’” she said.
Lee argued that China’s established manufacturing capabilities and biotechnology sector could give the country an advantage as artificial intelligence becomes more closely integrated with industrial applications. Its extensive network of factories and research laboratories provides access to real-world data that could become increasingly valuable in developing technologies for robotics, drug discovery and other specialised uses, she said.
For Mubadala, the renewed interest in China forms part of a broader effort to diversify its portfolio and expand its exposure to long-term growth opportunities across Asia. Andrew Wang, who leads the firm’s consumer division for private equity, said China offered attractive valuations alongside access to a vast domestic consumer market.
“Valuations are lower than they’ve been in years. I think this will be a really good vintage for investors in China,” Wang told CNBC. He identified China as Mubadala’s top priority for consumer investments in Asia, citing the potential for household consumption to expand and the increasing competitiveness of domestic brands.
Wang said Chinese companies were moving beyond their traditional reputation for producing inexpensive goods as homegrown brands developed more innovative, higher-value products and strengthened their international competitiveness. In September, Mubadala announced a minority investment in Chinese coffee chain Luckin Coffee as part of a deal worth roughly $1 billion alongside Centurium Capital.
Other major sovereign investors are also pursuing opportunities in Chinese companies. Qatar Investment Authority and Norway’s sovereign wealth fund participated in Alibaba’s $10.2 billion share offering in August, while Singapore’s Temasek has been identifying investments in biotechnology, domestic consumer brands and artificial intelligence-related hardware.
“China continues to be interesting,” Temasek’s chief investment officer, Rohit Sipahimalani, said at the Milken Summit in Singapore. “Biotech in particular [is] a very exciting area out there which we’re investing in. Local consumer brands could really be important,” he said.
Sipahimalani also pointed to China’s growing competitiveness across the artificial intelligence hardware supply chain, predicting that Chinese manufacturers could increasingly challenge established international players. Temasek was among the cornerstone investors in the multibillion-dollar initial public offering of Chinese optical-components manufacturer Zhongji Innolight in July.
Interest is extending beyond Gulf and Singaporean investors. Indonesia’s sovereign wealth fund Danantara is seeking to expand its cooperation with China beyond existing partnerships in nickel processing and battery manufacturing, with artificial intelligence, robotics, healthcare and energy efficiency among its areas of interest.
Pandu Sjahrir, Danantara’s chief investment officer, told CNBC that the fund saw opportunities to use Indonesia’s energy resources to support artificial intelligence-related digital infrastructure and downstream industries. The fund has appointed a team leader for North Asia based in China to develop longer-term partnerships, particularly in downstream industries, he said.
Despite the sharp increase in investment, China and Hong Kong remain relatively small destinations for sovereign wealth fund capital compared with Western markets. Global SWF data showed that the United States attracted $132.4 billion in sovereign investments during the first nine months of 2026, while Europe and the United Kingdom received $44.6 billion. The $14.2 billion directed towards mainland China and Hong Kong remained a fraction of either total, even as investment flows into the region rebounded.
