China is seeing a renewed surge in technology-led optimism as it heads into 2026, as fresh advances in artificial intelligence and other high-tech sectors fuel a strong rally in tech stocks despite continuing economic challenges. Nearly a year after DeepSeek’s artificial intelligence breakthrough sent shockwaves through global markets, China is experiencing a new wave of technological progress that is lifting investor sentiment and reshaping perceptions of its innovation capabilities. This momentum is unfolding against a backdrop of a prolonged property downturn and weak consumer demand, but equity markets are increasingly focused on the country’s ambition to lead in strategic technologies.
Fresh progress across sectors ranging from commercial space launches to robotics and flying cars has bolstered confidence in China’s home-grown innovation push. Chinese technology shares have started the year sharply higher, with an onshore Nasdaq-style tech index up nearly 13 percent so far this month, while an index tracking Hong Kong-listed Chinese tech firms has risen close to 6 percent. Both have outperformed the Nasdaq 100, underscoring how expectations for domestic breakthroughs are offsetting macroeconomic worries. Optimism around home-grown technology has been the main driver of China’s equity rally since April last year, and analysts suggest momentum could strengthen further as DeepSeek prepares to roll out a new artificial intelligence model and Beijing finalises a new five-year economic plan that puts technological self-reliance at its core.
Global investors are taking note of China’s explicit goal to overtake the United States in advanced chips and artificial intelligence, with Mark Mobius of Mobius Emerging Opportunities Fund saying the stock market is signalling that China’s technology strategy will be “very exciting” going forward. Since DeepSeek stunned markets on January 27 last year with low-cost artificial intelligence models that matched global rivals in performance, other Chinese firms have accelerated efforts to build their own systems, and use of generative artificial intelligence has expanded rapidly among major internet companies including Alibaba Group Holding and Tencent Holdings. Beyond artificial intelligence, Chinese robots are competing in marathons, boxing matches and cultural performances, while large language models are being integrated into flying taxis and high-precision machine tools. According to Jefferies Financial Group, a basket of 33 Chinese artificial intelligence stocks gained around $732 billion in combined market value over the past year, and the brokerage said there could be further upside because China’s artificial intelligence market capitalisation is still only about 6.5 percent of that of the United States.
