As China-U.S. relations grow tenser by the day, a formerly flourishing relationship between the two countries’ capital markets feels increasingly like a distant memory. It wasn’t long ago Chinese tech firms freely raised money from U.S. investors, who later cashed out those investments with IPOs on American stock markets, hardly raising an eyebrow.
Against that backdrop, reports last week that Chinese social media darling Xiaohongshu raised fresh new funds from prominent Western-linked venture capital firm DST Global stands out as swimming against the tide. Such a move harkens back to a more open era of cross-border tech investments, holding out the possibility that international venture capital may still be able to find a place in China's increasingly isolated tech sector.
Only time will tell if the investment is an anomaly representing an isolated holdover from an earlier era, or whether it shows there’s still some appetite for Chinese tech firms among increasingly cautious Western private equity firms.