Esma Okutan, Contributing Photographer

Kevin Lu, a chairman at global private equity firm Partners Group, spoke at Yale’s School of Management on Tuesday about China’s changing economy. Partners Group manages $142 billion in assets.

Lu serves as Partner Group’s Chairman of Asia, overseeing the firm’s operations in Asia with offices in Singapore, Shanghai, Mumbai, Seoul, Tokyo and Manila. He is also head of the group’s Singapore office, a member of its Global Executive Board and an adjunct professor at Yale-NUS College in Singapore.

“What I hope the takeaway [of the talk] is, is to understand that China is an exceedingly complex country and economy,” Lu told the News. “And therefore, to use a purist view to look at China is almost always misleading … China has such a different culture from the West and it is such a fast evolving country and economy.”

During his conversation, Lu explained that Partners Group has been investing in China for over 15 years.

He also discussed the Chinese economy’s reliance on exports and how the government has been trying to promote domestic consumption as a driver of its gross domestic product.

“Domestic consumption may be the most stable driver, which is what the Western economy has been based on,” Lu told the News. “China has been trying nowadays to move there, but it hasn’t moved there. And now obviously, with all the problems we know, such as political problems, China is in a difficult place today to make that transition out.”

He explained that the country is the largest exporter of goods in the world, but that American reticence to invest in Chinese domestic production has made the move difficult to navigate. 

Song Ma, who is an associate professor of Finance at the SOM and moderated the conversation, also mentioned demographic problems in China. 

“I think the population problem or the demographic problem in general in China is also something that we’re going to watch for the next few decades,” Ma said during the discussion. “For example, the birth rate has been fairly low and also the aging population is really pushing the country to a kind of unexplored territory … There are a bunch of policies that are trying to increase the population growth that do not seem to work particularly well based on recent statistics.”

Ma asked Lu about the possible economic implications of this population problem.

Lu said that such demographic challenges are not specific to China and that countries like Singapore are also dealing with a decreasing rate of population growth. However, he said that there are “a couple of factors” that could help mitigate these issues.

According to Lu, China is beginning to rely much more on machines for production, which could reduce the negative economic consequences of the country’s decreasing labor force. He also mentioned that aging demographics could end up lessening the problem of unemployment in younger generations.

“Some of the challenges China faces … almost offset one another,” Lu noted during the conversation. “If you look at the two things separately, both are big problems, but when you put them together, they actually partially solve each other like a hedge.”

Ma also asked Lu how investors’ views are affected by what he called the recent “foreign capital escape” from China following an executive order in August that restricts U.S. investment in the country. 

Lu responded that the U.S. government’s restrictions on American investment in China could gain a lot of attention from global investors but that there are still a lot of growing opportunities for foreign investors in the nation. 

Wenru Shi GRD ’24, who attended the talk, told the News that she appreciated the conversation’s specific focus on China. 

“I am from China,” she said. “And for students, I think it’s important for us to know whether to connect more with Chinese resources in the future. Also to think about what are some ways we can lead ourselves to contribute more to society and also to the capital flow in the next decade.”

With a GDP of $17.73 trillion, China is the world’s second largest economy, after the United States.