In an interview with Nikkei Asia, GIC’s Chief Investment Officer Jeffrey Jaensubhakij noted that the U.S.-China rivalry has extended beyond trade and technology issues to capital flows, prompting businesses and investors to rethink their strategies regarding the world’s second largest economy.

“That represents considerable uncertainty about what are the types of areas that you can invest in and won’t be impacted by some of the restrictions that have been put on,” Jaensubhakij said.

The shift in investments from GIC reflects the more cautious stance of global investors over China. Earlier this month, Singapore’s state-owned investor Temasek Holdings said it was moderating the pace of its investments and applying a “geopolitical lens” to its deals.

In response to shifts in the global supply chain, GIC said it has “incrementally” moved its capital to sectors and countries benefiting from them. “Most of it so far has been basically out of China into countries such as Mexico, India, Indonesia and Vietnam,” Jaensubhakij said.

Apple, for example, is among a number of electronics and semiconductor companies that are seeking to reduce their dependence on China for manufacturing and instead expand their presence in India and Vietnam.

Jaensubhakij noted that the production output and other capabilities of these countries “will take a little bit longer” to develop, due to the lack of sufficient infrastructure. But he said GIC can support demand for industrial and logistics real estate, as well as office space.

“We think there are many such opportunities in these countries,” he added.

Still, GIC Chief Executive Lim Chow Kiat stressed that the fund is continuing to seek long-term investment opportunities in China, in areas like green technology and electric vehicles, for example. “They’re coming out very, very strongly. So we continue to see such opportunities,” Lim said.

Last week, Chinese regulators reportedly met with global investors, including GIC, to hear their concerns about investment in the country. The China Securities Regulatory Commission invited global private equity firms and venture capital groups to discuss the steps that can be taken to ensure their continued deal flows into the country.

Lim of GIC noted that “it might take some time for deal flows to happen again” in China, with the rebound from three years of zero-COVID restrictions having fallen short of expectations. “If we come across good deals we expect to continue to participate in that,” he added.

Lim was speaking ahead of the release of GIC’s annual results on Wednesday, which showed that the fund delivered an average annual return of 4.6% above inflation over the past 20 years, a slight increase from 4.2% recorded a year ago.

By geography, the U.S. remains the largest investment destination at 38% of GIC’s portfolio in the year to March, up from 37% a year ago. Asian economies excluding Japan fell from 25% to 23%.

GIC has a mandate from the Singapore government to deliver long-term returns above global inflation and increase the purchasing power of the city-state’s foreign reserves. It does not disclose the total value of its assets but this is estimated by analysts to exceed $700 billion.

On the back of rising interest rates and an uncertain global economy, GIC is investing more towards real estate and infrastructure projects to protect itself against inflation. For infrastructure, GIC said it invests between $10-20 billion every year.

By asset class, it has increased its exposure to real estate from 10% to 13% of its portfolio in the year to March. Its allocation to public and private equities were unchanged at 30% and 17%, respectively, of its overall investments, while nominal bonds and cash decreased from 37% to 34%.