China’s private equity secondary market is gaining momentum after a record-breaking first half of 2025, fuelled by steep discounts and improving investor sentiment, according to sources cited by Reuters.

Secondary transactions in yuan-denominated funds hit 77.3bn yuan ($11bn) between January and June, up 89% from last year, according to ZERONE data. Assets are being sold at discounts of 40–50% to net asset value, compared with 10–20% in the US.

Canada’s Caisse de dépôt et placement du Québec (CDPQ), which halted new private equity commitments in China two years ago, is weighing the sale of around $2bn in China-linked assets via secondary trades. Meanwhile, CDH Investments is preparing a continuation vehicle to offer liquidity to some of its fund investors.

LGT Capital Partners, which in June co-led $500m in continuation vehicles for 13 assets managed by IDG Capital, said it expects most of its future China allocations to come through secondaries. Singapore’s sovereign wealth fund GIC also participated in IDG’s vehicle, acquiring stakes including shares in ByteDance.

“We expect the majority of capital we are going to deploy in China in the short to medium term to be via secondaries,” said Doug Coulter, LGT’s Hong Kong-based partner and co-head of Asia Pacific private equity.

China’s improving outlook is supporting activity. The CSI 300 index is up 7% this year, while Hong Kong’s Hang Seng Index has climbed 25%. Hamilton Lane’s Mingchen Xia noted that easing geopolitical tensions and progress in tariff negotiations are restoring confidence.

The surge in China mirrors a global trend, with Jefferies reporting that secondary transactions hit $103bn worldwide in H1 2025 as IPO and M&A exits remain subdued.

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