Chinese AI may be the next speculative bubble left unexplored.
Investors are overwhelmingly underweight China equities after two decades of underperformance versus U.S. stocks. That neglect is now colliding with an AI boom fueled by rising confidence and state support.
https://www.reuters.com/breakingviews/chinese-equities-are-ready-long-march-upwards-2023-12-14
Valuation spreads are extreme. The U.S. tech ETF QQQ trades at about six times sales while China’s ETF KWEB trades at about one time. That gap is historically unprecedented and risky.
https://seekingalpha.com/article/4768632-qqq-versus-kweb-chinas-lead-over-the-us-may-be-temporary
Open-source AI is not a fringe trend in China. Models from companies like DeepSeek, Moonshot AI, Alibaba and Baidu are deeply affordable and are already outperforming Western closed systems.
https://www.reuters.com/technology/artificial-intelligence/big-tech-faces-heat-chinas-deepseek-sows-doubts-billion-dollar-spending-2025-01-27
https://www.reuters.com/technology/artificial-intelligence/baidu-make-ernie-ai-model-open-source-end-june-2025-02-14
The CCP is pouring state capital behind this shift. A National AI Industry Fund launched in early 2025, backed by $8.2 billion, joins a broader $47 billion semiconductor fund that now includes AI chain investment.
https://www.rand.org/pubs/perspectives/PEA4012-1.html
China’s aggressive push gives it leverage beyond tech. If global adoption switches to open‑weight models hosted by Chinese infrastructure, Western incumbents could lose dominance. China becomes a geopolitical hedge: secure supply, lower cost, strategic fallback.
If the world pivots, those who stayed underexposed to China tech risk missing not just gains but a tectonic shift in AI leadership. This is not a potential rise. It may already be here.
Note: This is not financial advice and is for educational purposes only. Please conduct your own due diligence.
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