【By Bear Chao Ran, Observer News】"Although the competition between China and the United States in the field of artificial intelligence (AI) technology is intensifying, American investors are still investing heavily in Chinese AI companies."

The Wall Street Journal reported on December 10 local time that investors are now driving up the stock prices of Chinese tech companies developing AI models and investing in exchange-traded funds (ETFs) tracking the Chinese tech sector. According to fund managers, venture capital firms based in China are raising funds denominated in US dollars for AI investments, while American endowment funds, which have long avoided the market, are also considering returning to China.

This momentum comes as U.S. lawmakers have called for stricter restrictions on U.S. capital flowing into China under the pretext of "national security." The U.S. House of Representatives passed a defense spending authorization bill on the same day, which is expected to be finalized before Christmas, including a provision that grants President Trump the power to strengthen the rules limiting U.S. investment in China's high-tech industries, such as AI, during the Biden administration.

July 27, 2025, Shanghai, China, at the 2025 World Artificial Intelligence Conference. Visual China

According to reports, the geopolitical situation between China and the United States had originally weakened investors' interest in Chinese private companies, but with Chinese AI models led by DeepSeek demonstrating this year the ability to compete with their American counterparts, public market investors are increasingly attracted to investment opportunities in China. At the same time, American investors are not facing any restrictions when purchasing stocks of Chinese companies involved in AI.

"China is such a huge market," said Shi Jialong, head of China internet research at Nomura Securities, "we will see an increasing inflow of funds from American investors."

London-based investment firm Ruffer believes that listed Chinese tech giants still have room to rise because their price-to-earnings ratios, a common standard for measuring whether a stock is expensive, are lower than those of their U.S. counterparts, such as Alphabet, the parent company of Google.

Ruffer's portfolio of 19 billion pounds grew by nearly 11% this year. Gemma Cairns-Smith, an investment expert at the company, said this growth was partly due to Alibaba's contribution, which accounted for 1.5% of its total investment portfolio.

"China is an important player in the AI field," Smith said, "its valuation is significantly discounted compared to its U.S. counterparts, and investors may miss out on opportunities."

David Tepper, a hedge fund magnate in the U.S., has publicly expressed optimism about Chinese companies this year. According to securities filings, Alibaba was the largest component of his company Appaloosa's disclosed public investment portfolio in November, accounting for 16% of approximately $7 billion in public stock investments.

In July, BlackRock stated that the pace of fund inflows into ETFs tracking the Chinese tech sector exceeded that in the U.S., with 15% of the funds flowing into Chinese tech ETFs coming from U.S. investors that month.

Since July, two major funds tracking Chinese stocks have further grown. Data from London Stock Exchange Group (LSEG) shows that the size of the KraneShares CSI China Internet ETF listed in New York has increased by $1.4 billion, reaching nearly $9 billion, while the size of the Invesco China Technology ETF listed in the U.S. has doubled, approaching $3 billion.

Laura Wang, equity strategist at Morgan Stanley in Hong Kong, promoted the opportunities of the Chinese market to investors during her visit to the U.S. this autumn, stating that 90% of the attendees expressed a desire to increase their investments in China, as companies in China's AI-driven robotics and biotechnology sectors have become increasingly attractive.

Fred Hu, CEO of Spring River Capital, revealed that there has been great interest and curiosity about the Chinese market this year.

Monolith Management, a venture capital firm founded by former Sequoia Capital China investors, recently raised nearly $300 million, planning to invest in early-stage startups. Meanwhile, long-term focused venture capital firm Qiming Venture Partners is also raising a dollar fund.

"It's clear that in the AI field, investors basically have only two choices: China or the U.S." Li Yihao, a founding partner of domestic venture capital firm Creekstone Ventures, said. His venture capital firm is currently raising a fund. He added that for investors looking to invest in private tech companies in China, "the biggest challenge remains geopolitical issues."

In January, the investment ban targeting certain private Chinese companies in specific high-tech areas issued by the Biden administration took effect upon leaving office, including quantum computing and AI models exceeding technical thresholds. In October, despite the "trade truce" reached between China and the U.S., the U.S. Congress continued to push for expanding investment restrictions.

Previously, Lin Jian, spokesperson for the Chinese Foreign Ministry, stated that China strongly opposed the U.S. investment restriction rules targeting China. China has raised concerns with the U.S. and will take all necessary measures to firmly safeguard its legitimate rights and interests.

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Original: toutiao.com/article/7582530521117295113/

Statement: This article represents the views of the author.