U.S. investors are going big on China AI despite concerns in Congress

U.S. investors are plowing money into Chinese companies involved in artificial intelligence, despite growing competition between Washington and Beijing over the technology.

- Rory Jones & Tracy Qu

China still can't match U.S. AI models in advanced chips. But Chinese companies have already begun to apply AI widely.

(AFP)

Investors are driving up the share prices of Chinese tech companies developing AI models and adding cash to exchange-traded funds tracking the broader tech sector in China. Venture-capital firms based in China are raising U.S. dollar-denominated funds to deploy in AI investments, and U.S. endowments that shunned China for years are weighing a return, according to fund managers.

The momentum comes as U.S. lawmakers, citing national security, are calling fortightercurbson American capital flowing to China. Congress’s annual defense-spending authorization bill, passed by the House on Wednesday and set for final approval before Christmas, includes a section handing President Trump the power to strengthen Biden-era rules limiting U.S. investment in Chinese high-tech industries such as AI.

House Speaker Mike Johnson (R., La.) said Sunday that “investments propping up Communist China’s aggression must come to an end.”

US-China geopolitics have dulled investor appetite for private Chinese companies. But public-market investors are increasingly drawn to the opportunity in China, after Chinese AI models—led by DeepSeek— have shown this year they can compete with U.S. peers. U.S. investors face nolimitationsin buying public shares of Chinese companies involved in AI.

“China is such a huge market,” said Jialong Shi, head of China internet equity research at Japanese bank Nomura. “We are going to see increasing fund inflow from the US. investors.”

Shares of internet giant Alibaba, listed in Hong Kong and New York, are up more than 80% this year to a four-year high. Alibaba has said it plans toinvest $53 billion over three years to build out AI infrastructure and pursue artificialgeneral intelligence, or human-level intelligence.