With issues such as China’s real estate crisis remaining unresolved, sovereign wealth funds worldwide are shying away from the Chinese market; meanwhile, the United States has solidified its status as the top destination for state-backed investment institutions by attracting massive capital into artificial intelligence (AI) companies.
According to a report by Nikkei Asia, total assets invested by government funds in North America reached $154 billion in 2025, accounting for half of the total investments made by such institutions.
Although these funds continue to grow in size, investment flows to emerging economies have declined, with the AI boom cited as a primary reason for this uneven capital allocation.
Data from the research firm Global SWF indicates that while global government investment institutions allocated approximately 20% to 30% of their capital to the U.S. from 2018 onwards, that figure surged to 52% in 2025 as AI investments accelerated.
By the first half of 2026, this proportion climbed further to 58%.
In contrast, investment in emerging economies such as China and India fell to $50 billion in 2025—a seven-year low—representing less than 20% of the total.
During the first six months of this year, the figure remained at a low level of $25 billion.
Global investment capital is moving away from China; data from the State Administration of Foreign Exchange shows that foreign investment plummeted from $344.1 billion in 2021 to $42.6 billion in 2024.
Although it rebounded to $80 billion in 2025, the figure remains low.
Investors are avoiding the region due to the prolonged slump in China’s real estate market. Furthermore, Beijing’s tightening of regulations on foreign capital has made investors increasingly reluctant to commit funds. Meanwhile, China’s own outbound investment continues to rise, driven by the need to finance projects associated with the Belt and Road Initiative.