China channels $28 trillion capital markets into AI race with US

China is increasingly turning its enormous domestic stock and bond markets into a source of funding for its technology ambitions, redirecting private capital toward industries at the center of its competition with the United States. A Bloomberg report highlights the strategy as a significant shift from Beijing’s traditional dependence on government subsidies, tax incentives and direct state investment to develop strategic technologies. Chinese technology companies have reportedly raised about $217 billion through equity and debt markets over the past two years, giving businesses access to a growing pool of domestic capital. The scale of the shift is particularly visible in the semiconductor industry, where memory-chip manufacturer CXMT has emerged as a major example of Beijing’s new approach. CXMT, China’s largest memory-chip producer, listed on Shanghai’s STAR Market on July 27 and raised approximately $9.8 billion in one of the largest public offerings ever completed on mainland Chinese exchanges. Investor enthusiasm was extraordinary, with the company’s shares surging about 466% on their first day of trading. The successful listing was supported by government efforts to accelerate the company’s path to the public market, including a new preliminary review mechanism that allows companies to resolve regulatory issues before formally launching an IPO. CXMT was reportedly the first company to pass through the pilot system. The listing demonstrates how China’s financial markets can complement government industrial policy by directing private investment toward sectors considered strategically important. However, the strategy also carries significant risks. CXMT’s valuation has risen to levels well above some international memory-chip competitors, with analysts warning that government support, investor enthusiasm and limited share availability may be contributing more to the valuation than underlying fundamentals. Gary Tan, a portfolio manager at Allspring Global Investments, has argued that policy-driven sentiment is playing an important role in the company’s market premium. China’s practice of setting IPO prices relatively conservatively can also limit how much capital companies ultimately raise, potentially leaving domestic firms with less funding than similarly valued foreign competitors. Nevertheless, CXMT is unlikely to be an isolated case. Several Chinese artificial-intelligence companies are preparing to tap public markets as Beijing seeks additional sources of financing for its technology sector. Z.AI and MiniMax are reportedly pursuing mainland listings following their Hong Kong debuts, while Moonshot has indicated plans to go public within six months. The company recently attracted global attention through its Kimi K3 artificial-intelligence model, adding to the growing competition among Chinese AI developers. DeepSeek has also begun laying groundwork for a potential public offering. The emerging trend reflects a broader transformation in China’s technology-financing model. Rather than relying almost entirely on state-directed capital, Beijing is increasingly attempting to mobilize household savings and institutional investment through the country’s enormous financial markets. The approach could provide technology companies with a much larger pool of funding while allowing the government to maintain strategic influence over where capital flows. The strategy also highlights a major difference between the Chinese and American technology ecosystems. While U.S. technology companies have historically attracted enormous amounts of private investment and public-market capital, China is attempting to build a similar financing engine around strategically selected industries. The success of this model will ultimately depend on whether market enthusiasm translates into productive investment, technological breakthroughs and sustainable corporate earnings. If valuations become detached from fundamentals, the same capital markets that accelerate China’s technology ambitions could also amplify financial risks. For now, however, Beijing appears determined to make its $28 trillion stock and bond markets an important financial engine for the country’s race to compete with the United States in semiconductors, artificial intelligence and other critical technologies.