China Steers $28 Trillion in Capital Markets Toward AI Race With U.S.

Today’s Focus

China is redirecting its roughly $28 trillion in combined equity and bond market capacity toward artificial intelligence and semiconductor companies, according to reporting from Bloomberg published this week. The push is designed to close the technology gap with the United States after years of U.S. export controls on advanced chips.

The most visible signal came from ChangXin Memory Technologies, known as CXMT, whose Shanghai IPO popped 466% on its debut, according to Yahoo Finance. CXMT is China’s leading maker of DRAM memory chips and has told regulators it is targeting a 30% share of the global DRAM market by 2030, according to Tom’s Hardware.

The Financial Times reported that China International Capital Corporation (CICC), a state-linked investment bank, has become the primary underwriter for a wave of AI-related listings on the Shanghai and Shenzhen STAR boards. The listings are drawing capital from state-owned enterprises, provincial guidance funds, and household investors.

Beijing’s approach combines subsidized lending, government-backed equity funds, and preferential IPO treatment for firms designated as strategic. CXMT plans to build a sixth mega-fab, though Tom’s Hardware notes the expansion is constrained by limited access to extreme ultraviolet (EUV) lithography tools, which the Netherlands and the U.S. restrict under export rules.

The Biden and Trump administrations have both tightened controls on advanced semiconductor exports to China since 2022. The new financing surge is Beijing’s answer: rather than buy the tools it cannot get, it is pouring capital into homegrown alternatives across memory, logic chips, and AI model developers. Apple and Micron, both exposed to Chinese memory supply, are being watched closely by investors, according to Yahoo Finance.

The Debate

Supporters argue

Chinese state media and officials frame the capital-markets push as a legitimate response to what Beijing calls U.S. “technology containment.” The People’s Daily has argued that Washington’s chip export controls forced China to accelerate self-sufficiency, and that mobilizing domestic savings for strategic industries is standard industrial policy.

Backers inside China’s financial system, quoted by the Financial Times, contend that channeling household and institutional capital into AI firms creates a virtuous cycle: listings fund R&D, R&D produces competitive products, and returns flow back to retail investors long shut out of high-growth tech. CICC executives told the FT the STAR board is now doing what the Nasdaq did for U.S. tech in the 1990s.

Some Western analysts see strategic logic even if they oppose the goal. Dan Wang, a China technology researcher, has written that Beijing’s willingness to tolerate losses and duplication in chipmaking is exactly the kind of patient capital that pure market economies struggle to sustain. Supporters point to CXMT’s 466% debut, per Yahoo Finance, as evidence that investors believe the strategy is producing viable firms.

Critics argue

U.S. officials and China hawks in Congress argue the financing surge shows export controls need to be tightened, not loosened. Rep. John Moolenaar (R-MI), chair of the House Select Committee on the Chinese Communist Party, has repeatedly called for expanded restrictions on U.S. investment in Chinese semiconductor firms and on the sale of chipmaking equipment.

Critics also question the underlying economics. Bloomberg’s reporting notes that many of the AI and chip firms raising capital have thin revenues and unproven products, raising the risk of a subsidized bubble that misallocates capital. Skeptics compare it to China’s earlier solar and electric-vehicle build-outs, which produced global leaders but also large-scale bankruptcies and overcapacity that spilled into export markets.

Human-rights groups including the Australian Strategic Policy Institute have argued that Chinese AI firms benefiting from the capital push are also suppliers to state surveillance systems in Xinjiang and elsewhere, and that Western index funds passively holding these stocks are effectively financing that infrastructure.

What the experts say

Independent analysts describe a race with real constraints on both sides. Chris Miller, a Tufts University historian and author of “Chip War,” has told interviewers that China can plausibly reach parity in mature-node memory and logic chips within this decade, but that leading-edge production still depends on ASML’s EUV tools, which China cannot legally buy or currently replicate.

The Center for Strategic and International Studies (CSIS) has tracked Chinese state guidance funds and estimates cumulative government-directed semiconductor investment at more than $150 billion since 2014, with mixed returns. CSIS researchers note that SMIC, China’s most advanced foundry, remains roughly two generations behind TSMC on process technology.

The Peterson Institute for International Economics has argued that U.S. export controls are slowing China’s frontier progress but accelerating its investment in domestic substitutes, a trade-off Washington policymakers openly acknowledge. Peterson’s Martin Chorzempa has written that the long-run outcome depends less on any single control and more on whether U.S. and allied firms out-innovate a well-funded rival.

By the Numbers

$28 trillion: approximate combined size of China’s equity and bond markets now being steered toward AI and chip firms, per Bloomberg.

466%: first-day IPO gain for CXMT on its Shanghai debut, per Yahoo Finance.

30%: CXMT’s stated global DRAM market share target by 2030, per Tom’s Hardware.

6: number of mega-fabs CXMT plans to operate as part of its expansion, per Tom’s Hardware.

$150 billion+: estimated cumulative Chinese government-directed semiconductor investment since 2014, per the Center for Strategic and International Studies.

2 generations: estimated gap between China’s SMIC and Taiwan’s TSMC on leading-edge process technology, per CSIS.

2022: the year the U.S. imposed sweeping export controls on advanced chips and chipmaking tools to China, per the U.S. Commerce Department.