Charted: The Rapid Decline of China’s Private Sector

What We’re Showing

This graphic visualizes start-up activity and venture capital fundraising in China over the past several years. Data comes from Preqin and ITjuzi, accessed via Financial Times.

Key Takeaway

China’s private sector has shrunk dramatically over the past several years due to prolonged COVID-19 lockdowns, real estate bubbles, stagnating equity markets, and increasing government scrutiny.

What is the Government Doing?

According to reporting by the Financial Times, many insiders believe the decline is due to government crackdowns on risk-taking entrepreneurs. This includes the detainment of Alibaba founder, Jack Ma, in 2021 after he criticized regulators.

Another aspect is declining foreign investment. With less capital coming into the country, state-owned enterprises are becoming the only source of funding for start-ups.

“Today, VC firms have to explain to the state why their companies failed and why they have lost the country’s money” - Reporting by Financial Times