US dollars exit China's VC market, ending 20 yr marriage that enabled startups

US dollars are exiting China's venture capital market, marking the end of a two-decade partnership that fueled the growth of mainland start-ups. The departure of foreign capital, which facilitated the success of tech firms like ByteDance and Shein, has led to a significant drop in funding. This shift is attributed to tightening regulations, such as Beijing's cybersecurity probe into Didi Chuxing's New York listing. As a result, international investors are facing challenges in cashing out, with IPO plans for companies like Shein facing regulatory hurdles. Simultaneously, US scrutiny of investments in sensitive Chinese sectors is increasing, impacting firms like GGV Capital and Qualcomm Ventures. The evolving landscape sees a decline in private capital, replaced by government-backed funds, prompting discussions about the future of China's venture capital industry. This transformation has led to a shift in power dynamics, with state-owned entities becoming dominant players, raising concerns about the industry's direction and adaptability to the new investment environment.