China-focused hedge funds surged in 2025. Here's who won big.

• Hedge funds betting big on China generated strong returns last year.
• Managers, including Bridgewater, Tekne, and Pinpoint, benefited from a strong year for Chinese stocks.
• Many funds are also invested in ByteDance, the China-based owner of TikTok.

At the start of 2025, alarms were blaring about the risk of investing in China.

A new protectionist administration was taking over in the US at the same time China's domestic real estate market was teetering. A possible US ban on TikTok, the popular social media app, imperiled ByteDance, one of the country's biggest tech companies. American companies seemed to have surged ahead of Chinese rivals in artificial intelligence development.

Twelve months later, and many of the biggest fears appear to be overblown. The Chinese government has focused on stimulating the economy, leading public companies to significantly increase their buybacks. ByteDance sold a majority stake in its US TikTok operations and is now more valuable than ever, with HSG, the venture capital firm formerly known as Sequoia China, valuing the company at between $350 billion and $370 billion recently. And China's AI scene, led by startup DeepSeek, is keeping pace with Western peers, and Nvidia will be permitted to sell its powerful H200 chips to Chinese companies, the US government said Tuesday.

Hedge funds willing to invest in the country last year were rewarded. Bridgewater, which manages $92 billion across all its strategies, generated a 34.2% return in its China Total Returns fund, a person close to the manager told Business Insider. Tekne Capital, managed by Beeneet Kothari, a onetime lieutenant of billionaire Stanley Druckenmiller, was up more than 50% last year, a person close to the manager said.

Kothari's $1.5 billion firm is an investor in Chinese companies such as DiDi Global, recruiting firm Kanzhun, and data-center builder GDS, the person said. Kothari told Business Insider in an interview last year that the headwinds facing the country made strong companies very cheap.

According to HSBC's Hedge Weekly report, funds based in China and investing in the country performed well. $3.4 billion Pinpoint's China-focused strategy returned more than 24%, while its multistrategy offering, which invests across Asia, was up 11.6%. George Jiang's long-running Golden China fund made close to 33%, and Epimelis Capital, run by Hutchin Hill and Goldman Sachs veteran Fei Sun, made 35% in its China-centric strategy.

The average China-focused fund was up close to 18%, according to Hedge Fund Research, outpacing the industry average of 10.7%.

Going into 2026, investors will be watching how the volatile relationship between the US and China evolves, especially around trade agreements connected to chips, as well as any indication that China might invade Taiwan.

ByteDance will also be a focus for funds — Tiger Global and Coatue are both backers — as the social media giant continues to grow.