Venture Investment in China Down 31%... Lowest in 7 Years

On the 17th (local time), CNBC reported that investments in Chinese startup companies sharply declined, hitting the lowest level in seven years. The slowdown in China's economic growth and geopolitical tensions were cited as reasons.

According to market research firm PitchBook, Chinese venture capital invested in 3,072 deals worth $26.7 billion (approximately 35.4 trillion KRW) in the first half of this year. This represents a 31.4% decrease compared to the previous year on an annualized basis, falling below the 2016 level. Most of the investment amounts were small-scale, and the investment volume in the second quarter also showed a decline for the fourth consecutive quarter.

CNBC analyzed that the market sentiment, which was already in a slump, worsened further as China's economic recovery slowed after the COVID-19 pandemic and US-China tensions spread to the financial sector. The most significant factor was the decrease in foreign investment. Deals involving investments from outside mainland China accounted for only about 10% of total transactions in the first half of this year, marking an all-time low.

PitchBook stated, "Although not specifically confirmed, it is understood that some American investors reduced their investment exposure to China due to various factors including geopolitical concerns, the economic slowdown in China, and crackdowns on the IT industry."