China Wants Its Tech Champions to Raise Money at Home

Two explosive stock market debuts in Shanghai in recent weeks have underscored a pair of China’s intertwined ambitions: harnessing investor enthusiasm for homegrown companies riding the artificial intelligence boom and reducing dependence on American technology and finance.

The companies — CXMT, China’s leading memory chip maker, and Unitree Robotics, a Chinese maker of humanoid robots — both chose Shanghai to list their shares. Their offerings were encouraged by government policies aimed at steering promising tech companies toward domestic financial markets rather than relying on state subsidies or foreign capital.

They were departures from years past, when the path for successful Chinese tech start-ups so often ran through Silicon Valley and Wall Street.

“The flow of global tech capital was essentially a one-way street looking westward,” the Chinese Communist Party-controlled Global Times said in an editorial last week, citing the CXMT and Unitree initial public offerings in Shanghai as signals of a change. “Today, however, the world is shifting its gaze from West to East.”

Under Xi Jinping, China’s top leader, Beijing has pursued self-reliance across industries, including critical materials, food and many others, seeking to reduce the leverage that countries can wield over it. Nowhere is that national strategy more evident than in technology, where developing A.I. and advanced semiconductors requires staggering amounts of capital.

Increasingly, the government wants that capital to come from China. The extraordinary reception for CXMT and Unitree suggests that Chinese investors are willing to provide it.

First came CXMT, short for ChangXin Memory Technologies. Late last month, its shares soared 470 percent on the first day of trading and have climbed further since, giving the chipmaker a market value of around $545 billion and pushing it past Tencent as China’s most valuable publicly traded company.

CXMT has benefited from A.I. technology’s insatiable demand for high-speed memory chips, which are essential for storing and moving vast quantities of data. Its main domestic rival, Yangtze Memory Technologies Company, is also preparing to go public.

Then came Unitree. Its shares began trading on Wednesday in Shanghai, and surged 460 percent on its debut. At one point, the stock was up 629 percent before pulling back.

Unitree occupies a more speculative frontier of the A.I. boom. There are still doubts about how quickly a large commercial market will develop for machines that look and move like humans. But videos showcasing the feats of Unitree’s humanoid robots have attracted millions of views online: performing kung fu routines, scaling walls, doing backflips, running races and boxing. In China, the company has become a symbol of the country’s high-tech ambitions.

The blockbuster offerings point to China’s push for technological and financial self-reliance in tandem.

The Global Times, which often espouses nationalist views, argued that stronger domestic capital markets could provide Chinese technology companies with an alternative to American financing. “As technological autonomy becomes a reality,” it stated, “the domestic capital market gains a basis for reasonably valuing these companies, no longer needing to rely on ‘validation’ from overseas exchanges.”

China experts say the growing emphasis on local capital markets is an evolution in the country’s industrial policy. Beijing is seeking to rely less heavily on state subsidies, which have often proved costly and inefficient, instead leaning more on investors to decide which companies deserve capital.

Subsidies can work well in established industries, where the product is understood and the technological path relatively clear. For cutting-edge technologies, they can be less effective.

“They work badly at the frontier, where nobody knows which approach wins and they tend to prop up firms that should fail,” said Gerard DiPippo, a director at the Eurasia Group, a research group in Washington.

Domestic capital markets and investors, Mr. DiPippo said, will increasingly be relied on as “a better way to discipline growing tech firms.”

The government’s role is becoming more like a referee and champion of Chinese capital markets. But it still gets involved directly on occasion, acting like a venture capitalist.

Last year, Beijing set up a “national venture capital guidance fund” to work with Chinese investors and eventually deploy as much as $145 billion in investment in companies pursuing high-tech fields like A.I. and quantum computing.

The Shanghai stock market has long been known for speculative volatility and for a listing process burdened by red tape. In June, the Shanghai Exchange issued guidelines to streamline the process for Chinese A.I. software companies whose chatbots compete with those from OpenAI, Anthropic and Google.

The Chinese start-ups developing these so-called large language models, the exchange said, “urgently need the supporting role of the capital market.”

The first Chinese A.I. model makers to go public early this year — Z.ai and MiniMax — listed first on the Hong Kong Stock Exchange, a market many investors regard as more established and less volatile than Shanghai.

But the government is encouraging all Chinese A.I. model developers to establish secondary listings in Shanghai, which Z.ai and MiniMax have said they plan to do.

Beijing is not only steering companies toward domestic markets. It is also willing to step in to support those markets when they come under pressure.

In July, as fears of excessive A.I. spending triggered a global stock sell-off, the Shanghai market fell. Two state-owned investment funds, China Reform Holdings and China Chengtong Holdings, responded by announcing purchases of $9 billion in Chinese shares and expressing confidence in the market.

That increasingly state-guided system contrasts sharply with an earlier era, when American investment funds and venture firms rushed into China, lured by its growth and encouraged by policymakers in Washington. In the 2010s, American investors were early backers of Alibaba, the e-commerce giant; ByteDance, TikTok’s parent company; and Didi, once hailed as China’s answer to Uber.

Now, as Beijing encourages domestic investors to put money into homegrown technology companies, it is making foreign capital a less welcome part of the equation.

Geopolitics has contributed to the retreat. American firms have grown wary of being caught in the crossfire of U.S.-Chinese trade and technology disputes. Foreign venture investment in China has fallen sharply, and many firms have scaled back or left altogether.

Sequoia Capital, for example, spun off its China business two years ago. The resulting firm, Hongshan Capital Group — its name means “redwood” in Chinese — backed Unitree and owns a 7 percent stake in the company, now worth about $3.5 billion.

For Chinese companies, “raising money overseas is actively discouraged,” said Kevin Xu, founder of Interconnected Capital, a hedge fund that invests in A.I. technologies. “The Manus saga is the clearest example.”

Manus, an A.I. company started by three engineers in Wuhan, China, developed an A.I. agent that caught Meta’s attention. By the end of last year, Meta had agreed to buy Manus for $2 billion. But in April, the Chinese government intervened and demanded that the deal be unwound.

Manus had moved its headquarters to Singapore, but Beijing still considered it a Chinese company subject to its authority. This month, the unwinding was completed, and Manus announced it had resumed operating as an independent company.

Meaghan Tobin contributed reporting from New York.