China is bullish on stock market and AI chips
Soaring markets and another DeepSeek breakthrough, Putin and Modi to attend military parade, trade war update, journalist denied Hong Kong visa, youth culture, old consumers.
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China’s chip stocks soar after “real DeepSeek moment”
Chinese markets at 10-year highs
“China's stock market is on a tear supported by state money and big institutions,” and the “benchmark Shanghai Composite Index is up by a quarter since April and at 10-year highs,” reported Reuters, although this is “stark contrast to China's economy which remains mired in a property crisis, weak consumption and a deflationary spiral.”
AI chip stocks soar
Another factor boosting share prices is what investor and tech analyst Kevin Xu called “the real DeepSeek moment.” This refers to a statement from Chinese AI firm DeepSeek that its new model is “designed for the next generation of domestically produced chips to be released soon.” Semiconductor and “computing power stocks surged across the board,” reported Phoenix News, adding that “the market reaction wasn't simply hype, but rather a recognition of the potential for domestic chips to truly reach the forefront of the global computing power market.”
As Chinese investors piled into domestic chip stocks, U.S. Representative Raja Krishnamoorthi introduced the No Advanced Chips for the CCP Act of 2025 to Congress, and his colleague John Moolenaar wrote a letter to Secretary of Commerce Howard Lutnick begging him to implement an “export control policy must aim to maintain an overwhelming and ever-widening gap in AI compute between China and the U.S.”
China’s still got a long way to go to catch up to leading global semiconductor technology, but the direction is clear, and it makes U.S. attempts to cut China off from advanced tech seem increasingly futile. Beijing is also leaning into AI: The State Council this week “set targets for the adoption of AI-powered devices across various industries—aiming for over 70% by 2027 and over 90% by 2030.”
Related:
China’s chipmakers are seeking to triple the country’s total output of artificial intelligence processors next year / Financial Times
Chinese AI chipmaker Cambricon posts record profit as Beijing pushes pivot from Nvidia / Financial Times
Meet Cambricon: How 2 ‘genius brothers’ created China’s potential rival to Nvidia / SCMP
Global South solidarity with China and Russia
Putin and Modi to attend SCO summit
Chinese state media webpages are currently dominated by propaganda about two upcoming events:
The largest ever summit of the Shanghai Cooperation Organization
From August 31 to September 1, Xi Jinping will host Vladimir Putin and Narendra Modi, among “more than 20 foreign leaders and 10 heads of international organizations” at the annual summit of the Shanghai Cooperation Organization (SCO), a regional security grouping with ten full members and more than 20 other observers and partners.
Reuters said the event will be “a powerful show of Global South solidarity in the age of Donald Trump while also helping sanctions-hit Russia pull off another diplomatic coup.” Beijing’s support for Moscow was also on display on August 26, when Xi Jinping met the chairman of the Russian parliament's lower house and called the China-Russia relationship “unparalleled in terms of stability, maturity and strategic significance among major-country relations.”
Military parade to mark end of war against Japan
On September 3, there will be a military parade to mark what state media call “the 80th anniversary of the victory in the Chinese People's War of Resistance Against Japanese Aggression (1931-45).”
Expect to see new weapons and military tech and enough goose stepping soldiers to make Donald Trump cry with envy. But some senior military men will be missing: as Bloomberg reported: Xi Jinping “has ousted almost a fifth of the generals whom he personally appointed while running the country.”
China consolidates rare earth dominance
Trump trade war update
Rare earths
On August 25, Donald Trump said China has to “give” the U.S. rare earth magnets, “they don’t give us magnets, then we have to charge them 200% tariffs or something.” But his shrill tone is not matched by his actions, which seem to indicate that he would do almost anything to make some kind of deal with China that he can brag about.
Meanwhile, Beijing is establishing a “rare earth product flow record system” which research firm Trivium said “will sharpen Beijing’s ability to steer economic planning and maximize the bite of export controls.”
Airplanes
Trump also threatened to cut off airplane parts, saying “200 of their planes were unable to fly because we were not giving them Boeing parts purposely because they weren’t giving us magnets.” This might be true in the short term, but as with chips, the leverage will not last long: This week also brought news that Zhōu Míng 周明, “renowned as the mastermind behind key industrial software used in planes such as the Boeing 787 and Airbus A380, has left his leadership role at U.S.-based global engineering giant Altair to return to China.”
Chinese students
On August 25, while meeting South Korean President Lee Jae-myung at the White House, Trump said “I hear so many stories about we’re not going to allow their [Chinese] students…to come in. We’re going to allow their students to come in. It’s very important, 600,000 students.”
The state-owned China Daily was not impressed, commenting that the “welcome would be welcomed if sincere.”
One country, one system
Another blow against the press in Hong Kong
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