Since late last year, Beijing has moved quickly to rein in the giants of its so-called platform economy, which had taken advantage of an often-permissive regulatory environment to rapidly expand their businesses.

The crackdown has impacted the sector's shares, with the CSI Overseas China Internet index down 22% so far this year, underperforming broader indexes.

GIC, with assets under management of $550 billion according to data platform Global SWF, retains a positive view on its Chinese investments due to the country's handling of the pandemic, macroeconomic discipline and agility to respond to economic weaknesses, GIC Chief Executive Lim Chow Kiat told Reuters in an interview.

In the year to March 31, 2021, the fund saw its strongest annualised returns over a 20-year period, driven by a global market rally.

GIC's China investment portfolio includes Alibaba and fintech affiliate Ant Group, food delivery firm Meituan, as well as real estate firm China Vanke and online healthcare platform JD Health International.

In its latest move, China's cyberspace regulator launched a probe into ride-hailing giant Didi Global earlier this month, just days after Didi made its New York debut and raised $4.4 billion.

"If we looked at a lot of these actions, we would say they help in making the industries, the companies, the business models more sustainable," said Lim, who joined GIC nearly 30 years ago as a portfolio manager.

Some analysts have said China's regulatory crackdown would encourage fair competition and support broad-based growth.

"We see that China continues to come out with innovative business models and technology, (so) our confidence in the sector, and clearly the country remains positive," Lim said.

In the year to March, GIC reported an annualised 20-year real rate of return - its main performance gauge - of 4.3%, the highest since 2015, and up from a comparable 2.7% in 2020.

The share of emerging market equities in GIC's portfolio rose to 17% in the latest year from 15% a year ago, while the share of private equity increased to 15% from 13%. Allocation to bonds and cash fell to 39% from a record 44% a year ago.

GIC remains cautious on asset prices in general, Lim said.

Jeffrey Jaensubhakij, GIC's group chief investment officer said high valuations meant the fund had to look at distinctive themes and hunt down specific areas to invest in.

While the COVID-19 pandemic has had a lasting impact on the real estate sector, which makes up 8% of GIC's portfolio, the fund still sees room to make investments, especially in markets that are still moving towards urbanisation, Jaensubhakij said.

(Reporting by Anshuman Daga and Aradhana Aravindan; Editing by Sumeet Chatterjee and Elaine Hardcastle)

By Anshuman Daga and Aradhana Aravindan