LPs will be looking for the green light from Trump-Xi talks

President Donald Trump landed in Beijing last week for high-stakes talks with Chinese Communist Party leader Xi Jinping. The negotiations will have implications for how Western allocators think about their exposure to the country, which presents investment opportunities that they’re struggling to ignore.

Since Trump’s first term in office, the ongoing trade war between the US and China has pushed limited partners to act regarding their Chinese investments. Some more risk-off LPs have made a concerted effort to wind down their exposure, while others faced legislative pressure to do so.

For some allocators, the tide is shifting back to China, where investors are drawn by attractive companies trading at low multiples and by the opportunity to gain exposure to critical technologies, including AI infrastructure, semiconductor tooling and cybersecurity products.

While the US still produces the most foundational AI models, China leads the world in research publication volume, patent output and industrial robotics installations. China also has the fourth-largest number of data centers in the world, after the US, Germany and the UK.

Sign up for Capital Pool

Weekly commentary on what’s driving LP decision-making, with senior funds columnist Jessica Hamlin.

Subscribe

For funds betting on China as a strategic priority, success is, in part, dependent on the outcomes of last week’s meeting and on getting the political green light to press ahead.

In the US, political and legislative pressure to divest from China peaked in 2023, following tensions over issues including the mandated audit of Chinese companies by US regulators and the futures of Taiwan and Hong Kong.

Several states, including Arkansas, Indiana, Florida, Missouri, Oklahoma and Kansas, passed legislation banning their public retirement systems from investing in Chinese companies, funds and financial institutions.

Even in states without outright bans, some pensions unloaded or at least reevaluated their exposure to funds investing in Chinese companies.

China dropped to 19^th place on the California State Teachers’ Retirement System‘s list of country asset exposure in 2023, for example. In 2022, it had been ranked sixth.

From 2022 to 2023, the number of US-based LP commitments to funds investing in Greater China was cut in half, according to PitchBook data. From 2024 to 2025, that number fell even further, from 40 to four.

Canadian pensions, considered among North America’s most sophisticated allocators, also reevaluated their exposure. In 2023, the Canadian parliament formed a special committee to question the country’s largest public pension plans, known together as the Maple 8, about their investments in China.