The emergence of DeepSeek marks a significant milestone in the ongoing competition between China and the West in the realm of artificial intelligence (AI). It is evident that traditional methods of technological containment and advancement cannot effectively suppress or surpass the advancements made by DeepSeek, prompting Western entities to explore alternative tactics within the financial domainThe Hong Kong stock market has become the initial battleground for the influx of Western capital...

At the onset, the Hang Seng Technology Index experienced a remarkable surge of over 4%, achieving its highest levels since February 2022 and reaching a three-year highThis significant rise in tech stocks is directly correlated with the breakthrough of AI concept stocks, notably represented by DeepSeekIndustry giants such as Baidu, leading the charge into AI research, saw an 11% increase in their stock price, while Alibaba, having announced an exclusive partnership with Apple, witnessed a 7% rise in its valueThis momentum of tech stocks reflects a widespread realization among investors of the underappreciated valuation within this sector, driving a frenzy of capital investment...

In a critical moment, all three major indices in the A-share market rallied, and these developments have been interpreted by the market as the gradual emergence of China's own version of a stabilization fundSuch movements have shattered Western capital's attempts to undermine China's rise in AI, with initial outcomes decidedly in favor of the Chinese side...

What exactly are foreign investors aiming for?

The backdrop of the Hang Seng Technology stocks soaring is the profound global impact of China's AI industry

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DeepSeek's launch of the R1 model has enabled it to stand out without the reliance on excessively powerful computational chipsIt has achieved a remarkable balance of low-cost and high-performance, not only accelerating the rise of China's AI industry but also compelling the world to reevaluate the previous speculative exuberance surrounding this sector...

The attitude of the Western camp towards DeepSeek is now quite multifacetedOn one side, numerous corporations acknowledge the substantial benefits that DeepSeek brings to the overall industry and display a willingness to engage in constructive competitionConversely, regulatory bodies in various nations are openly focused on restricting and banning DeepSeek's operational scope...

This indicates that DeepSeek has become a thorn in the side of the WestHowever, they find it difficult to exert real pressure on domestically rooted enterprises, compelling them to adopt a counter-strategy in overseas markets while resorting to financial market tactics to hinder Chinese AI companies...

It is well known that the Hong Kong stock market serves as a reservoir for international capital directed towards China and acts as a barometer for the Chinese financial marketThe record high of the Hang Seng Technology stocks reflects foreign investors' optimism regarding Chinese AI companies, although it also raises concerns about inflated valuations and the creation of asset bubbles...

Naturally, the inherent nature of capital is to seek a share in the gains from the rapidly growing AI sector, as DeepSeek has emerged as an industry leader, bolstered by a comprehensive suite of domestic supporting measures...Under government guidance, DeepSeek is becoming integrated into most institutional frameworks, with companies eagerly pursuing partnerships with DeepSeek

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This initiative can be likened to China’s "Gateway to the Stars" program, marking the dawn of a large-scale AI infrastructure transformation...

The collaboration between Alibaba and Apple has highlighted China’s commitment to deepening its reform and opening upThis situation raises the question of how foreign investors can enter the Chinese market in a structured, efficient mannerThe A-share market offers insights into this processForeign capital predominantly enters the A-share market through mechanisms such as Qualified Foreign Institutional Investor (QFII), Renminbi Qualified Foreign Institutional Investor (RQFII), and the Stock Connect schemes linking Shanghai, Shenzhen, and Hong KongThis time, A-shares seem poised to break free from the long-standing constraint of 3,000 points, moving towards the 4,000 points mark...

This upward momentum is closely intertwined with China’s impending shift in financial and monetary policies that target the year 2025. The introduction of cutting-edge products like DeepSeek not only serves as a catalyst for advancing the A-share market but also positions it as a key beneficiary of the new era...However, foreign capital, wishing to participate in the A-share market, might have to abandon their traditional strategies or risk defeat...

Financial Warfare Between China and the United States

The overarching aim of Western capital, led by the United States, has been to manipulate value against China, suppressing the growth of Chinese capital and impeding the enhancement of its financial market systemsThis isn't a recent occurrence; the tactics previously employed in the soybean industry serve as a reminder of their aggressive strategies

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The primary focus moving forward will be on safeguarding against the destructive actions of this Western capital...

The global economic landscape is undergoing rapid transformationsOn one hand, the real economy remains a pivotal pillar determining the dynamics between nations, while on the other hand, the emergence of the internet economy, thriving on technological data, is gaining increasing significance in these geopolitical games...The tariff wars initiated by the U.S. government are primarily aimed at transitioning the U.S. economy from a reliance on virtual sectors back to reality, while striving for a balance between low unemployment and inflation...

China's contributions to technological advancements rival those of leading Western enterprises, evidenced by the gradual attainment of technological superlativityHowever, these domestic entities often require more extensive financial markets and more refined public offering systems...This accounts for the routine nature of Chinese concepts listed on U.S. stock markets around 2016, but the deteriorating relations between China and the U.S. have paved the way for intensified confrontations in the financial sphere...

In dealing with this challenge at the governmental level, the U.S. has relied on three primary strategies: increasing interest rates through the Federal Reserve to destabilize the Chinese economy, restricting Chinese firms' access to capital markets, especially in Hong Kong, and utilizing administrative measures to manipulate capital flows and currency exchange rates...

Moreover, in an unseen dimension, the U.S. attempts a propaganda war, urging so-called ‘experts’ to pressure China into prematurely opening its capital markets, which could lead to easy harvesting of Chinese assets...

How Can China Achieve Financial Superiority?

In the quest for becoming a financial power, realizing this objective has become an essential national policy

The discussion must now shift towards the strategies required to achieve this goal...

Engaging in financial conflicts with the West exposes inherent limitations; this is not merely a question of numerical disadvantage, but also a structural challenge where capital countries possess an innate attraction for investment...

Replicating the institutional frameworks of Western financial markets and creating an environment akin to their entrepreneurial ecosystems would inherently conflict with China's foundational structureInstead, the path forward necessitates the exploration and development of a financial ecosystem tailored for China's unique characteristics...

In the past 40 years of reform and opening up, China has nurtured the emergence and growth of its capital marketsPresently, the challenge lies in how to engage internationally and leverage overseas markets for domestic economic growthThus, the relationship between China and Western capital conglomerates is characterized by competition rather than mere imitation...

Nevertheless, we must confront the severe external challenges alongside internal contradictionsReturning to our central theme of stimulating the stock market and alleviating the debt market issuesThe potential of Chinese technologies like DeepSeek to invigorate both the A-share and Hong Kong markets remains uncertain, but the corresponding financial market systems should safeguard such emerging enterprises and establish channels for foreign capital integration...

From a national policy perspective, there is a clear awareness of these dynamicsAs China strives to emerge as both a technological and financial power, it appears there is an increasing trend towards integrating these ambitions

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