Temasek's China exposure drops to 18%: The truth behind the misunderstood "retreat" and the underestimated big bet
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Temasek's China exposure drops to 18%: The truth behind the misunderstood "retreat" and the underestimated big bet
When the market is blinded by percentages, smart capital has already seen through the essence.
Navigating Web3 tides with focused insightsThe truth behind Temasek's China exposure dropping to 18%: a misinterpreted "retreat," an underestimated bet—beneath the declining ratio lies a real-money commitment of 4 billion new dollars.
In a skyscraper in Singapore’s Marina Bay Financial District, Temasek Holdings has just delivered a record-breaking performance: its investment portfolio net value reached 434 billion Singapore dollars (approximately 2.35 trillion RMB) for the fiscal year 2025, up 45 billion Singapore dollars from the previous year, hitting a new historical high.
Yet one figure in this glowing report has stirred waves in the Chinese market: based on asset location, Temasek’s investment share in China has dropped to 18%, further widening the gap with the Americas (24%). Suddenly, claims of “Temasek exiting China” have gained momentum.
"Whether it’s 18% or 19%, our long-term outlook on China remains unchanged—we are bullish and heavily invested," declared Wu Yibing, Chairman of Temasek China, firmly addressing reporters from Caijing magazine.
He presented a counterintuitive fact: during FY2025, Temasek’s absolute net value of investments in China grew by approximately 4 billion Singapore dollars (about 21.6 billion RMB). The shrinking percentage is due to denominator expansion driven by a roaring U.S. bull market and Temasek’s global portfolio rebalancing.
While the market is blinded by percentages, smart capital sees through to the essence.
I. The Illusion of Proportion
A misunderstood "withdrawal signal." Temasek’s FY2025 report acts like a prism, refracting the complex spectrum of global capital flows.
The financial report shows stable domestic exposure at 27% in Singapore, the Americas rising to 24%, India increasing to 8%, while China declined by one percentage point to 18%. Behind these numerical shifts lies hidden complexity.
Historically, Temasek’s investment ratio in China has indeed followed a parabolic trajectory: entering the Chinese market in 2004, peaking at 29% in FY2020, then gradually declining over five years to 18%. This curve is often simplistically interpreted as an “exit roadmap.”
Wu Yibing offers a different coordinate system: “We remain significantly overweight compared to any global index.” A closer look reveals that China’s asset net value was about 440.8 billion RMB in FY2020 and 423 billion RMB in FY2025—a mere 4.03% decrease over five years. Over the same period, the MSCI China Index fell nearly 30%, while the U.S. S&P 500 rose over 40%. The change in proportion stems more from dramatic fluctuations in the denominator than active contraction in the numerator.
Temasek’s portfolio structure reveals a crucial truth: 49% consists of unlisted assets valued at cost rather than market price; fund investments carry a 4–6 quarter performance lag. This means the current China allocation actually reflects investment decisions made two years ago. “We are bottom-up investors who prioritize corporate resilience,” says Wu Yibing, exposing the superficiality of Wall Street’s “percentage narrative.”
II. Strategic Shift
From scale preference to value hunting. In FY2025, Temasek executed a tactical turnaround—shifting from a net sale of 7 billion Singapore dollars to a net investment of 10 billion Singapore dollars (approximately 54 billion RMB), marking its largest scale in twenty years. This agility aligns perfectly with the annual report theme: “Adapting with Agility.”
On the global chessboard, Temasek is making precise moves. Its Americas allocation expanded to 24%, partly fueled by bold bets on artificial intelligence infrastructure. Temasek joined the AI Infrastructure Partnerships (AIP) initiative launched by Microsoft and BlackRock, aiming to raise 30 billion U.S. dollars and unlock hundreds of billions in investment. “This reflects our focus on major future transformations,” explained Ravi Lamba, Head of Strategy Planning. India has become a new favorite, with its 8% allocation nearly doubling from five years prior. Vishesh Chari, Managing Director of Temasek India, stated outright that India is “relatively insulated from geopolitical impacts amid strong domestic consumption.”
Among its multibillion-dollar investment plans, consumer and healthcare targets such as Haldiram snacks and Manipal Healthcare Group stand out. In China, the investment logic has evolved profoundly. Through Danming Capital, Temasek established a renminbi-denominated private equity platform in Shanghai, with its first fund focusing on early-stage life sciences ventures. This move is telling—using localized funds to capture innovation at its earliest stages while mitigating geopolitical volatility. “Our partners want to jointly explore the Chinese market,” revealed Shen Ye, Vice President of Temasek China. This “co-investment” model serves as a sophisticated risk-sharing mechanism.
In consumer sectors, Temasek increased its stake in Yum China during FY2025, viewing it as a model of “rising Chinese chain consumer brands.” From Mixue Ice Cream & Tea to Luckin Coffee, local Chinese brands are transitioning from low-cost weapons to symbols of value recognition. “Local brands meeting Chinese consumer needs are on the rise,” predicted Shen Ye, foreseeing this trend continuing.
III. The China Bet
Dual high-stakes bets in AI applications and decarbonization. While international capital exits China due to policy uncertainty, Temasek sees undervalued opportunities.
“Over the past two years, China’s systematic reforms have been underappreciated by capital markets,” said Wu Yibing bluntly. He specifically highlighted the regulatory framework of “one bank, one bureau, one commission,” reflecting top-level emphasis on capital markets. Signs of consumption recovery are emerging: in May 2025, China’s total retail sales of consumer goods rose 6.4% year-on-year, exceeding market expectations. Yet Wu Yibing remains clear-eyed: “Consumer confidence recovery is a gradual process,” especially since “the most visible manifestation of wealth effects” hinges on stability in stock and property markets. Temasek’s China bet centers on two main tracks. Artificial intelligence applications are strategically prioritized.
“China has the most data and AI talent—the pace of application could accelerate,” said Shen Ye, echoing findings from the Report on the Development of Artificial Intelligence Applications in China 2025: China’s intelligent computing power capacity has reached 1,037.3 EFLOPS, growing 43% annually, with AI decision intelligence coverage reaching 65% in finance.
Wu Yibing offered a sharper insight: “What we see today in ChatGPT or DeepSeek represents only the ‘elementary school level’ of AI,” while “U.S. stocks rose so much because AI will boost labor productivity across all industries.” Temasek focuses on China’s industrial penetration potential—manufacturers using generative design to shorten new car development cycles from 24 months to 14. The sustainable living sector commands a heavy 46 billion Singapore dollars (11% of the portfolio).
Facing signs of global decarbonization slowdown, Wu Yibing asserted: “China will not waver one bit on carbon neutrality,” as solar and wind directly impact energy security, and China has already achieved profitable decarbonization. For photovoltaic and new-energy automakers mired in losses, he offered a startling view: “Competition isn’t bad,” the real enemy being “subsidy-driven overcompetition.” This deep understanding of China’s competitive philosophy marks a cognitive blind spot frequently misread by Western investors.
IV. The Eye of the Storm
Survival artistry amid geopolitical fog. COFACE’s June 2025 risk report paints a dramatic picture: the global economy “swings between slowdown and escalating risks,” with downgraded risk ratings for 23 industries and four countries, and growth potentially falling below 2%.
In this “uncertainty-as-new-normal” environment, Temasek’s strategy of “adapting with agility” proves invaluable. Trump’s tariff threat looms. Though currently paused for 90 days, if reinstated, 75% of Canadian exports to the U.S. would be severely impacted, with auto metal tariffs possibly surging 50%. Temasek’s 24% allocation in the Americas versus 18% in China resembles a tightrope walk over a tariff volcano—perfectly balanced. The Middle East powder keg rattles energy nerves.
COFACE warns: a blockade of the Strait of Hormuz could send oil prices above $100 per barrel; yet OPEC+ production hikes coupled with weak demand might bring prices down to $65–75. Temasek’s bets on renewable platforms like Neoen serve precisely as hedging strategies against such precarious scenarios. Emerging markets are increasingly fragmented: Argentina, riding “Mileiomics,” expects 5% growth; Mexico faces trade shocks risking zero growth; India appears bright but masks slowing consumption. Against this backdrop, Temasek’s 8% India and 18% China allocations form a subtle complementarity—one betting on domestic resilience, the other on industrial upgrading.
“We won’t exit just because a fund matures,” stated Temasek India’s team regarding its Zomato investment—revealing their confidence to weather cycles. This long-termism serves as ballast against geopolitical storms.
In July 2025, Temasek signed an investment agreement in Mumbai, India, planning to deploy 10 billion U.S. dollars within three years; simultaneously, Danming’s private equity team on Shanghai’s Bund is screening early-stage life science projects. These two scenes form a perfect metaphor for global investing. Figures like Wu Yibing deeply understand the arithmetic of capital: when 18% corresponds to an absolute value of 423 billion RMB, with 4 billion Singapore dollars added annually, this transcends technical asset allocation—it becomes a vote of confidence in national transformation.
“All of Temasek’s portfolio companies are experimenting with AI applications,” observed Shen Ye, revealing the true pulse of China’s economy. While international attention fixates on overcapacity and weak consumption, Temasek sees logistics robots achieving 98% automated sorting rates in Shenzhen warehouses, automakers cutting new vehicle development cycles by ten months, and photovoltaic factories thriving without subsidies.
Global capital hasn’t left—it has merely changed posture to dig deeper.
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