Trump's Chip Embargo Against China Is Backfiring Spectacularly

"In a probably-predictable twist of geopolitical irony, America's effort to block China's access to cutting-edge AI chips hasn't succeeded in stifling the People's Republic - but instead forged a more self-reliant alternative to Silicon Valley that has investors jumping ship. As reported by Reuters, global investors are putting more of their money into Chinese tech companies due to concerns over the size of Wall Street's AI bubble, which continues to grow unabated."

"A UBS Global Wealth Management report from earlier this month rated Chinese tech as "most attractive" to investors, the highest rating it dishes out in its global asset class assessments. The UBS researchers note that tech financiers are drawn by China's "strong policy backing, technological self-reliance, and rapid AI-monetization." "China's tech sector ramped up innovation in 2025, with notable advances across the AI value chain," the report stated. "New Chinese AI models have shown tech leadership, and supportive policy is reinforcing ecosystem resilience.""

"Sure enough, Reuters notes that institutional investment firms like the UK's Ruffer are increasing their investments in Chinese tech giants like Alibaba, while chasing a strategy of "deliberately limited exposure" to the top US tech giants. "While the US remains the leader in frontier AI, China is rapidly narrowing the gap," Gemma Cairns-Smith, investment specialist at Ruffer told Reuters. "The moat may not be as wide, or as deep, as many think... The competitive landscape is shifting.""

U.S. efforts to block China's access to advanced AI chips have spurred domestic tech self-reliance and a Silicon Valley alternative that is drawing global capital. Investors are reallocating funds toward Chinese tech amid concerns about an expanding AI valuation bubble in U.S. markets. Chinese large language models trail U.S. counterparts modestly, yet investor interest is driven as much by Beijing's push for technological independence as by valuation dynamics. Major wealth managers rate Chinese tech highly, citing strong policy support, technological self-reliance, and rapid AI monetization. Institutional firms are increasing China exposure while limiting allocation to top U.S. tech giants.

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