China’s tech self-sufficiency powers stock boom and helps it shake off economic malaise

Nearly a year after DeepSeek’s AI breakthrough rattled global markets, mainland China is entering 2026 with a fresh wave of technological advances that are powering a stock rally, even as its economy remains fragile.

Thanks to fresh progress in sectors from commercial rockets to robotics and flying cars, Chinese tech shares have begun the new year with a bang. An onshore Nasdaq-like tech gauge has shot up almost 13 per cent so far this month, while a measure of Hong Kong-listed Chinese tech firms has climbed nearly 6 per cent. Both have outperformed the Nasdaq 100.

Enthusiasm about home-grown technologies has been the single biggest driver of China’s equities bull run since last April, even as the world’s second-largest economy remained mired in a housing slump and anaemic consumption. The momentum may gain further support in the coming months as DeepSeek rolls out a new AI model and China unveils a five-year economic blueprint prioritising technological self-reliance.

“The stock market is telling us that what China is doing in the technology sector is going to be very exciting going forward,” Mark Mobius, managing director of Mobius Emerging Opportunities Fund, said on Friday. “You must remember China’s goal now is to overtake the US in technology, in high-level chips, in all kinds of AI. So the money is going in that direction.”

Since DeepSeek shocked global markets with its cheap and equally well-performing AI models on January 27 last year, fellow Chinese firms have accelerated efforts to develop their own versions. Adoption of generative AI has also surged among the country’s internet giants from Alibaba Group Holding to Tencent Holdings. Alibaba owns the Post.

Elsewhere, Chinese robots have competed in marathons, sparred in boxing matches and performed folk dance routines. In manufacturing, large language models are being embedded into advanced equipment, such as flying taxis and precision machine tools. The developments are recasting China in investors’ eyes from a low-cost manufacturing base into a credible challenger to US tech leadership, just as global capital hunts for the next growth engine.

In a basket of 33 Chinese AI stocks tracked by Jefferies Financial Group, the rally in the past year expanded their combined market value by about US$732 billion, the brokerage said in a January 13 report. Jefferies said it saw further upside because China’s AI market capitalisation represented only 6.5 per cent of that of the US.