Kohlberg Kravis Roberts & Co.

Private equity firms are pouring record amounts of capital into China. Reuters/Carlos Barria

Private equity firms have invested a record amount of capital in China since the beginning of the year despite sluggish growth in the world’s second-largest economy .

Private equity firms struck $16.7 billion of deals so far this year. the highest value on record, according to data provider Preqin Ltd. Throughout Asia, there has been $29.6 billion of investments so far this year, compared with $25.7 billion for all of 2013.

The slowdown in the region’s largest economy isn’t dissuading investors from mining China and neighboring countries for deals. Private equity firms tend to be contrarian investors and don’t rely primarily on economic growth to generate profits.

Speaking to attendees of the Thomson Reuters LP-GP Summit last week, Blackstone Group President Hamilton “Tony” James said he was on the “pessimistic end of Chinese growth in terms of intrinsic growth,” predicting that in the next few decades the country would have to pivot from building infrastructure and manufacturing plants to focus on consumer and social programs as its population ages.

“That won’t drive productivity, it won’t drive growth,” he said.

New York firm Blackstone hasnt yet followed in the footsteps of its rivals to raise a dedicated Asia-focused buyout fund, but instead has made select investments over the years, including last years take-private of information technology outsourcing business Pactera Technology International Ltd.

And seeing value in the region, the firm has raised more than $4 billion as of June 30 for an Asian real estate fund, which will focus primarily on China, India, Australia and Japan .

Fellow megafirms Kohlberg Kravis Roberts & Co. Carlyle Group and TPG Capital all have raised billions of dollars in the past few years for private equity investments in Asia, backing everything from chicken producers to the Chinese equivalent of Craigslist .

Those funds likely will encounter plenty of competition as they deploy capital in the coming years. Asia-based general partners are sitting on $129 billion of dry powder according to Preqin.

Bolstering confidence in China is the return of initial public offerings. one of the primary routes through which private equity investors can exit investments. A year-plus long moratorium on IPOs in China impeded deal making and fundraising throughout 2013.