Private markets dealmaking is starting to mirror Greater China 's K-shaped economy

Private markets dealmaking is starting to mirror Greater China 's K-shaped economy

Tue, September 22, 2026 at 8:21 PM GMT+3 2 min read

China's much-discussed "K-shaped" economy—which describes the widening gap between a booming tech industry and sluggish consumer sectors—is now feeding through into private market dealmaking.

While a national focus on AI, semiconductors and advanced manufacturing has led to a surge in VC investment in Chinese tech startups, PE dealmaking has been stunted in sectors hit by weaker consumer spending and slower GDP growth.

Greater China VC deal value more than doubled in the first half of 2026, to $52.8 billion, even as deal count edged down 1.8% to 3,764 transactions, according to PitchBook's 2026 Greater China Private Capital Breakdown.

PE investment rose too, up 62.1% in H1 to $23.4 billion across 172 deals. But almost two-thirds of that went into growth deals rather than buyouts, and PE backing for consumer businesses has dropped to $0.7 billion so far this year from $10.8 billion across all of 2025.

Some 50% of Greater China's total VC deal values in 2026 came from the AI sector alone, roughly double last year's share, with large language models and robotics heavily skewing the figures.

However, this uptick wasn't matched in deal count over the same period, suggesting a growing concentration of AI deals in China's VC market. This year's largest included LLM developer Moonshot AI, Shanghai-based foundational AI startup StepFun and Kling AI, an AI video-generation platform that spun out of social media platform Kuaishou.

All three have reportedly already begun planning to launch Hong Kong IPOs, following the lead of Zhipu and MiniMax, which both listed on the Hong Kong Exchange (HKEX) in January 2026. Elsewhere, Chinese embodied AI or humanoid startups also raised robustly, driven by the likes of X Square Robot, GigaAI and Spirit AI.

The average Greater China VC deal size jumped 91.1% to $51.8 million in 2026, while median values increased marginally by 17.8% to $14.5 million year-over-year. These further suggest capital concentration—and a widening dispersion of deal sizes in China's VC market, rather than broad-based growth across the startup ecosystem.

Public listings accounted for 96.7% of VC exit value this year. The single biggest was domestic chipmaker ChangXin Memory Technologies, which raised $8.6 billion in Shanghai in July, generating $76.9 billion in exit value—around two-fifths of the $184.5 billion generated across 101 listings in 2026. M&A and buyouts, by contrast, represented just 3.3% of aggregate value.

Chinese regulators and tech companies are increasingly in favor of A+H dual listings—a dual listing process across mainland exchanges, such as the Shanghai Stock Exchange's STAR market, and HKEX—which have driven overall Chinese IPO activity this year.

Junk boat crossing Hong Kong harbor.

Baona/Getty Images

This article originally appeared on PitchBook News