In a report published over the weekend, the US investment bank said investors were worried that China would fall behind globally in terms of technological competitiveness because of restrictions on access to advanced chips, artificial intelligence (AI) technology and security concerns. But recent breakthroughs in AI and other areas have made them consider “whether choosing one system would be the right choice, compared to investing in the two competitors at the same time”.
“The fear of missing out on China’s technological development has once again appeared,” wrote Laura Wang, the bank’s chief China equity strategist. She cited AI start-up DeepSeek, other companies in the sector and progress in electric vehicles and humanoids as key drivers of the phenomenon.
The introduction of DeepSeek’s powerful but cost-effective large language models earlier this year reignited global interest in China’s technology sector after regulatory crackdowns earlier in the decade kept many investors away. So far this year, Hong Kong’s Hang Seng Tech Index – which includes many mainland tech giants like Tencent Holdings and Xiaomi – is up nearly 22 per cent.
China still faces a number of challenges. The property sector, which for years contributed around a quarter of the nation’s economic growth, remains mired in a slump. And consumer spending, which Beijing had hoped would support economic growth, was still sluggish. China might not emerge from deflation until 2027, Morgan Stanley said.
The ongoing tariff war with the US has also left many Chinese exports facing tariffs of 30 per cent.
