At a time when China and the United States are racing to build separate AI supply chains, investors are betting on both sides, as American banks raise financing for Chinese AI startups, while Chinese money flows into American tech companies.
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The financial stakes are large. According to data from the London Stock Exchange Group, Wall Street banks acted as underwriters in 19 capital-raising deals for Chinese high-tech companies worth a combined $17.2 billion since the start of the year, representing around 30 percent of total issuances in the sector.
American stocks, particularly semiconductor companies, have also become the preferred destination for outbound Chinese investment funds.
US data shows that the value of American stocks held by investors from Hong Kong and mainland China rose 23 percent over the past year, exceeding $750 billion.
Public disclosures reveal intertwined financial ties between the two countries, despite competition that analysts compare to the Cold War-era space race.
AI is expected to feature prominently in discussions when US President Donald Trump and his Chinese counterpart Xi Jinping meet this week in Washington.
For investors, this mutual exposure represents a kind of safety net that gives both sides an interest in maintaining stable relations, while also lowering expectations that the Trump-Xi meeting could achieve a major breakthrough.
But these ties could unravel painfully if US-China relations deteriorate, increasing the divide between the two countries' AI development ecosystems.
Fred Hu, founder and chairman of private equity group Primavera Capital, said companies and investors in the United States and China continue to maintain ties and invest in one another despite sharp geopolitical volatility.
He added that the upcoming Trump-Xi summit could add further certainty and momentum to the underlying financial ties and the broader economic relationship between the two countries.
US Treasury Secretary Scott Bessent said he discussed with Chinese Vice Premier He Lifeng this week establishing a US-China dialogue on AI, including a system for notification regarding shared goals and risks.
Ongoing financial ties
Financial ties have continued and deepened despite China's pursuit of self-sufficiency in AI, and, on the other side, the US launch of an initiative aimed at securing its AI supply chains.
Washington imposes restrictions on supplying the most advanced chips and their manufacturing technologies to China and has for years restricted American investment in sensitive Chinese sectors tied to AI.
But investment rules include exceptions for securities traded in public markets and haven't prevented Wall Street's participation in the wave of Chinese AI company listings, whose investor interest is partly fueled by China's push toward self-sufficiency.
London Stock Exchange Group data showed Wall Street banks advised, during the current year, on more than 12 listings and secondary share sales for companies working in AI and chips.
James Buckley Thorpe, founder and CEO of AI company "Atlien," said Wall Street underwriting Chinese tech companies' IPOs resembles "profiting from both sides of a Cold War."
Optical component maker "Zhongji Innolight," which raised $6.8 billion in a major Hong Kong listing, included Goldman Sachs, Morgan Stanley, and Citigroup among the deal's joint global coordinators.
Goldman Sachs and Morgan Stanley also worked on the Hong Kong listing of AI developer "MiniMax," alongside chip companies "Montage Technology" and "Shanghai Enflame Technology" for semiconductors.
JPMorgan handled the roughly $2.6 billion Hong Kong share sale for "Victory Giant Technology," which manufactures printed circuit boards used in AI servers.
American banks also appear in the shareholder records of chip manufacturers listed on Shanghai's "STAR" market, a market resembling Nasdaq.
These holdings typically reflect banks' activity on behalf of their clients, and indicate they serve as channels for global capital flows into the sector.
From investors' perspective, American technological restrictions may help, rather than hinder, the development of local Chinese tech companies and increase interest in them, according to Buckley Thorpe.
He said: "There will be two internets, two chip ecosystems, two sets of rules, and your investment portfolio will need a passport for both."
He added that a Shanghai investor buying Nvidia shares and a pension fund investing in Hong Kong's "GPU" company are making the same bet, that politicians won't actually go all the way in escalating confrontation.
Capital seeking returns
Where traceable, data also shows strong flows of Chinese investment into the United States.
American stocks, including tech company shares, represent around half of the trillion yuan in assets, equivalent to $150 billion, managed by outbound Chinese investment funds under quotas overseen by China's foreign exchange regulator.
Chinese investment has risen this year in a number of American chip manufacturers, including "Micron Technology," "AMD," "SanDisk," "Lam Research," and "Applied Materials," according to data compiled by "Sinolink Securities."
According to "S&P Global Market Intelligence," the total value of American AI company funding rounds involving investors from China or Hong Kong rose sharply, from around $436 million in 2023 to around $8.9 billion by mid-September of this year.
Still, investment flows continue to shift, while clear friction shows beneath the surface.
Tilo Hanemann, partner at research firm Rhodium Group, said wealthy Chinese investors continue investing in American tech companies through offshore funds, but available information on those funds' structures remains extremely limited, making it difficult to determine the actual scale of exposure.
At least one US lawmaker criticized "JPMorgan Chase" and "Bank of America" over their participation in underwriting the Hong Kong listing of Chinese battery giant "Contemporary Amperex Technology," a company the United States says has ties to the Chinese military.
Washington also continues adding more Chinese tech companies to its list of firms it believes are aiding the Chinese military.
By contrast, "SpaceX's" website and its Hong Kong and mainland China IPO materials were inaccessible before its listing in June.
Despite these tensions, investors on both sides of what's known as the "silicon curtain" are currently still seeking to spread their bets.
Shile Hu, a China-born and China-educated entrepreneur and co-founder and CEO of San Francisco-based AI startup "Brnt X," said there likely won't be just one winner in the US-China AI race.
He added: "From an investor's perspective, I think betting entirely on one side represents a major risk."
The report indicates that the technological competition between Washington and Beijing hasn't prevented the continued flow of capital in both directions, despite growing political and technological restrictions.
Resource: Al-Ghad.
