The Chinese ride-hailing company's pullback from US markets emblematic of a shift to more geopolitically divided capital.

Global Corporate Venturing rarely covers potential pipes – private investments in public equities – but some signal broader, almost systemic shifts in capital flows.

One that could reportedly be about to happen is China state-owned car maker FAW’s purchase of a stake in local ride hailing service Didi Global, flagged by anonymous sources to newswires Bloomberg and Reuters.

Didi has been one of the totemic companies over the past decade for showing the power of corporate venturing.  Close ties with its largest shareholders, such as Tencent, Alibaba and SoftBank, have helped Didi’s growth – as has China’s rising power, its growing sophistication in capital markets and increasing ability to compete with US peers. After all, Uber’s plans for global dominance foundered in China and it sold its local business to Didi for smaller holding in the enlarged Chinese company.

Didi has raised almost $20bn of private finance and seemed the latest in the long line of China-based companies to float in the US last year with a $4.4bn initial public offering.

However, Didi is now becoming emblematic of a shift to more balkanized or geopolitically fragmented capital markets. The company, along with others, was slammed by Chinese authorities for the IPO and putting its data in the reach of a foreign country’s regulators. Under pressure Didi has effectively delisted and may potentially re-float back in China, which is where FAW could invest as support for the issuance.

The regulatory crackdown in China has lopped roughly $2tn off the market value of listed tech groups over the past 12 months as [China Premier Xi Jinping] has railed against the “disorderly expansion of capital,” according to the Financial Times.

The unwinding of US-China international capital flows is part of the state-wide push by both countries to control strategic industries of the future.

China has raised about $900bn in government guidance funds over the past decade to invest in strategic industries, such as biotech, artificial intelligence and chips, according to the Financial Times’s analysis,. VCs and corporations are encouraged to do the same. IPOs and public capital markets are providing capital to those that fit the state’s mission.

The amounts are staggering. China’s main markets in Shanghai and Shenzhen raised $35bn this year according to Dealogic compared with $2.4bn on US’s stock exchanges in the first three months. FAW raised a $144bn credit line in 2018 and is one of the state’s big four vehicle makers. Taking a stake and hence having influence or even control on Didi, which will also have to comply with China Communist Party control on executives, reinforces the position that Didi’s future is at the service of the state rather than broader stakeholders.

The same is increasingly true for other corporate titans in China. It is forcing a rethink of what is a corporation and what is government venturing — and what strings these might bring to entrepreneurs.