Bridgewater Associates, one of the world’s largest hedge funds, has made a dramatic exit from U.S.-listed Chinese equities, selling off nearly $1.5 billion in holdings during the second quarter of 2025. The move, reported across multiple outlets including Reuters and AInvest, has sent ripples through global markets and reignited debate about the future of Chinese stocks on American exchanges.
The decision marks a stark reversal for Bridgewater, which had ramped up its China exposure as recently as the first quarter of 2025, increasing its stake in Alibaba by a staggering 3,360%. But a confluence of factors—escalating U.S.-China trade tensions, renewed regulatory crackdowns, and mounting concerns about forced delisting—prompted the Connecticut-based fund to rethink its approach. According to filings with the U.S. Securities and Exchange Commission, Bridgewater closed out positions in 16 major Chinese companies, including Alibaba, JD.com, Baidu, PDD Holdings, Nio, Trip.com Group, Yum China, Qifu Technology, and Ke Holdings, as well as two China-focused exchange-traded funds.
This wasn’t just a minor portfolio tweak. The sell-off included 5.7 million shares of Alibaba, 2.8 million shares of JD.com, and 2 million shares of Baidu, and came at a time when the Chinese economy was showing signs of strain. Analysts cited by Reuters pointed to a deflationary crisis looming in the second half of 2025, with weak domestic consumption and an over-reliance on exports propped up by state subsidies. China’s GDP growth for the second quarter stood at 5.2%, but youth unemployment was on the rise, and concerns about the reliability of Chinese companies’ financial reporting had resurfaced.
Bridgewater’s exit was also shaped by the broader geopolitical landscape. In early April, President Trump’s administration raised tariffs on imports from China to over 100%, prompting swift retaliation from Beijing. The tit-for-tat escalation sent shockwaves through both U.S. and Chinese stock markets, and reignited fears about the forced delisting of Chinese firms from American exchanges—a longstanding worry that had faded somewhat after bilateral cooperation on audits in 2023, but came roaring back in the spring. As Treasury Secretary Scott Bessent bluntly put it, “everything is on the table” regarding the U.S.-China trade imbalance.
More than 100 Chinese companies, including tech giants like Alibaba and JD.com, remain listed on U.S. exchanges, with a collective market capitalization of around $1 trillion. But the specter of delisting hangs over those without secondary listings in Hong Kong or elsewhere. As noted by Reuters, companies such as PDD Holdings and Full Truck Alliance—sometimes called China’s “Uber for trucks”—are seen as especially vulnerable if the political winds shift further. Goldman Sachs estimated in April that U.S. institutional investors held roughly $830 billion in Chinese equities, and warned that a financial decoupling could force massive sell-offs.
The market’s reaction to Bridgewater’s withdrawal was swift. Shares of affected Chinese companies fell by 1–1.5% in pre-market trading, underscoring the symbolic weight of the hedge fund’s move. Yet, in a twist, China’s domestic stock market proved surprisingly resilient in the face of this high-profile exit. The CSI 300 Index, which tracks the largest companies listed in Shanghai and Shenzhen, actually rose 2.4% in the second quarter, buoyed by fiscal stimulus and export strength. Meanwhile, the CSI Caixin Rayliant Bedrock Economy Index—focused on small-cap, domestically oriented shares—gained 4.4% over the same period, highlighting the appeal of assets aligned with government policy and local demand.
Bridgewater’s strategic pivot was not just about reducing risk, but also about reallocating capital to sectors and regions seen as more promising in the current climate. The fund increased its holdings in U.S. technology giants, with a 154% surge in Nvidia shares and expanded stakes in Microsoft, Meta, and Alphabet. This shift reflects a broader trend among institutional investors, who are gravitating toward artificial intelligence and other high-growth tech sectors as a safe haven amid global uncertainty. As noted by AInvest, Nvidia’s dramatic growth in Bridgewater’s portfolio signals confidence in the resilience and potential of the AI sector.
Ray Dalio, Bridgewater’s founder and a long-time China bull, has played a complex role in this unfolding story. Dalio, who launched Bridgewater’s China onshore fund in 2018 and built up $6.96 billion in local assets under management, stepped away from the board and sold his remaining stake in the fund as of early August 2025. In public remarks earlier this year, Dalio acknowledged the challenges facing China’s economy—including trade conflicts and depressed prices—but argued that they were “manageable by Chinese leaders if they do their jobs well.” He also called for a rebalancing in U.S.-China relations, warning that trade imbalances had “hollowed out U.S. manufacturing” and urging both sides to work toward a deal to reduce tensions.
Despite Bridgewater’s high-profile exit, many analysts argue that China’s stock market still offers value for those willing to brave the volatility. The disconnect between fundamentals and sentiment, they say, creates opportunities in undervalued sectors. Small-cap A-shares, for instance, have outperformed thanks to targeted policy support. China’s AI market is projected to reach $154.8 billion by 2030, driven by advances in generative AI and robotics. The country also dominates 75% of global battery production for electric vehicles and green hydrogen, giving it a critical edge in the energy transition.
For investors weighing a return to Chinese equities, sector selection and risk management are paramount. Tech and AI leaders like Baidu and Tencent trade at significant discounts to their U.S. counterparts, while companies in battery production and green hydrogen are seen as relatively insulated from short-term trade frictions. Consumer-facing firms such as JD.com and Yum China, with their robust supply chains and brand strength, may also be well positioned to benefit from an evolving domestic market.
Still, the path forward is anything but straightforward. The tariff truce between Washington and Beijing was extended by 90 days in mid-August, temporarily averting a fresh escalation that would have seen U.S. tariffs jump to 145% and Chinese duties soar to 125%. For now, imports from China to the U.S. face a 30% levy, while U.S. exports to China are taxed at 10%. The threat of renewed trade hostilities continues to hang over the market, keeping investors on edge.
Bridgewater’s move is a powerful signal—but not a death knell—for Chinese equities. As the valuation gap between Chinese A-shares and U.S. stocks widens (with the former trading at a 30–40% discount), some see a compelling entry point for selective, long-term investors. Success, however, will depend on the ability to navigate geopolitical risk, diversify across sectors and geographies, and focus on companies with deep integration into global supply chains.
In the end, Bridgewater’s retreat from U.S.-listed Chinese stocks is both a cautionary tale and a call to adapt. For those willing to look past the headlines and dig into the fundamentals, China may yet hold the seeds of tomorrow’s growth.
