China is no longer just catching up with the West in technology: it is rewriting the rules of the game. Behind its ambition for digital self-sufficiency lies a meticulously integrated strategy that connects everything from critical raw materials to cutting-edge artificial intelligence. This ecosystem - linking software, hardware, robotics and mineral control - forms the basis of a new economic model geared towards resilience, technological sovereignty and global leadership.

The digital brain: AI as a macroeconomic driver

• The development of artificial intelligence has become the core of China's technology plan. Models such as DeepSeek AIwhich quickly became popular after its launch, mark the beginning of an unprecedented investment phase. Next year alone, the country's leading tech companies will invest more than 70 billion70 billion, with a projected increase of 38% increase in the CAPEX of AI developers by 2025. by 2025.
• The most relevant change is not only in the amount, but in the direction: much of this investment is now going into domestic hardware, displacing dependence on foreign chips. In parallel, AI is emerging as a pillar of productivity in the face of an aging population, offsetting the expected shrinkage of 25% contraction in the labor force over the next 25 years.
• Projections suggest that AI adoption could raise China's GDP by 0.2 to 0.3 percentage points. 0.2 to 0.3 percentage point by 2030, with total expenditure equivalent to 1% of annual GDP. In other words, AI does not just represent technological innovation: it is a structural economic response.

The physical backbone: clean energy and infrastructure

• For digital intelligence to work, it needs a gigantic energy base. And there China has an advantage that is hard to match: it controls 90% of the upstream solar 90% of the upstream solar marketand 85% of battery capacity and 60% of global electrolyzer production.. This supremacy enables it to guarantee cheap and stable energy to power its growing network of data centers. data centerswhose electricity demand is set to increase by 30% this year alone. 30% this year alone.
• The convergence of clean energy and artificial intelligence creates a virtuous cycle. virtuous cycleThe convergence of clean energy and artificial intelligence creates a virtuous cycle: data center expansion drives panel and battery production, and clean energy leadership sustains the AI boom at lower cost. China is building a self-sustaining ecosystem where each link reinforces the other.

Materialized intelligence: robotics and automation

• The third stage of the Chinese ecosystem is the materialization of the intelligence. Robotics and advanced automation represent the fusion between software and hardware, transforming industrial productivity.
• The market for robotaxis could exceed USD 47 billion by 2035while industrial industrial humanoids begin to be deployed in manufacturing and logistics, filling labor gaps and boosting efficiency.
• More than a technological showcase, these developments are intended to sustain to sustain economic growth in an aging in an aging country and maintain competitiveness in strategic sectors.

The hidden foundation: mastery over critical minerals

• Beneath all this gear lies an invisible but decisive factor: control of the refining of strategic minerals. control of the refining of strategic minerals. China dominates 92% of rare earthsand 96% of graphite and more than 70% of lithiumensuring an unrivaled position in global supply chains. This structural dependence gives the country a geopolitical bargaining power that transcends trade: it can literally decide the pace of technological progress in the rest of the world.
• Together, these four pillars -IA, hardware, robotics and minerals- form a closed economic cycle that seeks to shield China from external pressures and consolidate its role as a technological power. What began as an industrial strategy is today a profound reconfiguration of China's economic model. profound reconfiguration of the Chinese economic modelfocused on systemic efficiency, resource control and digital sovereignty.

Investment downturn

• We consider the Chinese technology sector among the most attractive globally. The AI trend has proven to be favorable and the sector has rallied more than 39% year-to-date (CQQQ ETF), nearly double the Nasdaq 100 in the US.
• We believe China's strategic drive toward technological self-sufficiency and innovation is setting the stage for this rally to continue. Technology sectors now drive the lion's share of MSCI China's performance (MCHI ETF +38% Ytd), and leading companies are generating solid earnings on the back of advances in artificial intelligence, cloud and domestic chip development (expected earnings have been revised up by +36% over the past 12 months).
• Our positive view of the Chinese technology sector, and the Chinese market in general, should also be supportive for emerging market (EM) indices. Fed rate cuts and US dollar depreciation should provide overall support, while EM currency resilience and favorable macroeconomic trends could also help attract further inflows and justify higher valuations. Valuations remain attractive versus global peers, with the MSCI EM trading at approximately 14 times forward earnings (a 30% discount to the MSCI ACWI). Emerging markets have returned 28% in 2025, that's double the S&P 500.

DISCLAIMER.

Corredora de Bolsa Investment Team