China's Funding it's AI War Against the USA With A Wave of State-Backed IPOs

Chinese chipmaker CXMT surged 466% in one day.

This is how Beijing plans to win the AI race...

China can't out-subsidise the US anymore. Local government debt is too high, and growth is slowing.

So Beijing found a new funding source: its own $28T domestic stock and bond markets.

- CXMT IPO'd in July
- Raised $9.8B on the Shanghai STAR Market
- Shares closed day one up 466%
- Briefly surpassed ICBC
- Became China's most valuable listed company
- Added to the MSCI China index just 10 days later

That kind of debut doesn't happen on its own.

Days before ChangXin Memory Technologies, Inc. listed, a semiconductor selloff in Korea and Japan spilled into China and hit chip stocks.

Beijing pumped in $8.3B to stop the bleeding.

ETFs bought a record amount of stock, and a major Chinese battery maker, Contemporary Amperex Technology Co., Limited, bought back its own shares. 

The market got propped up for one massive IPO.

This isn't a normal Chinese company raising money. 
The government is using the stock market to fund it.

But China can't match America dollar for dollar.

So it's using cheaper capital to close the gap.

- China raised $217B in 2 years
- The US raised $1.4T - 6x more
- Chinese tech bonds price at 1.9%
- That's 300bps cheaper than the US

CXMT is only the first name out...

Unitree Robotics, Moore Threads Technology Co. Ltd., and Yangtze Memory Technologies are next.

Beijing isn't trying to outspend the US.

It's trying to out-maneuver it.

Is China's version of capitalism going to succeed?