Chinese Tech Stocks Rally as Beijing Pushes AI Localization
Chinese semiconductor and AI stocks surged to 10-year highs following government mandates to increase AI penetration and localize chip production.
Chinese equities reached a 10-year high in August 2025, with the Shanghai Composite Index ascending to levels not seen since August 2015. The rally is driven by a return of overseas investors to onshore and offshore equities, which hold a combined value of US$20 trillion, and a domestic rotation away from fixed-income products due to record-low yields.
The Government of China accelerated this growth by releasing guidelines to deepen AI implementation across key sectors, setting targets to increase AI penetration to over 70% by 2027 and 90% by 2030. This push for technological innovation in AI, robotics, and advanced manufacturing has positioned Chinese stocks as undervalued innovation compared to other global markets.
Sector-specific gains were significant on August 28, 2025. SMIC Corporation shares rose 17% to a record closing price of CNY119.22. Cambricon Technologies surged 16% to CNY1,587.91, overtaking Kweichow Moutai to become the most expensive stock in China. Morgan Stanley reported that overseas buying gathered pace in June and July, with further inflows expected following the summer.
