US and Chinese Investors Keep Betting Across the AI Divide as Trump and Xi Meet

As Washington and Beijing push to build separate supply chains for artificial intelligence, investors on both sides are continuing to put money into each other's technology sectors, according to public disclosures reviewed ahead of a meeting between US President Donald Trump and Chinese President Xi Jinping in Washington this week.

The ties are substantial. Wall Street banks have acted as bookrunners on 19 Chinese high-tech equity capital market deals worth $17.2 billion so far this year, close to 30% of the sector's total issuance, LSEG data shows. The banks advised on more than a dozen AI and chip listings and follow-on share sales.

Optical parts maker Zhongji Innolight, which raised $6.8 billion in a Hong Kong listing, counted Goldman Sachs, Morgan Stanley and Citigroup among its joint global coordinators. Goldman and Morgan Stanley also worked on Hong Kong listings of AI developer MiniMax and chipmakers Montage Technology and Shanghai Iluvatar CoreX Semiconductor, while J.P. Morgan underwrote a roughly $2.6 billion Hong Kong share sale by Victory Giant Technology, which makes printed circuit boards for AI servers. US banks also appear in the shareholder registers of chipmakers on Shanghai's STAR Market, holdings that typically reflect client activity and suggest they act as conduits for global cash.

Money also flows the other way. US stocks, particularly semiconductors, are a favourite destination for China's outbound mutual funds, accounting for nearly half of the 1 trillion yuan ($150 billion) they manage under quotas controlled by China's foreign exchange regulator. The value of US equity held by Hong Kong residents and mainland Chinese has risen 23% in the past year to more than $750 billion, US data shows. Chinese holdings climbed this year in US chipmakers including Micron Technology, AMD, Sandisk, Lam Research and Applied Materials, according to data compiled by Sinolink Securities. S&P Global Market Intelligence puts the total value of US AI funding rounds involving investors based in China or Hong Kong at about $8.9 billion through mid-September, up sharply from roughly $436 million in 2023.

The financial links persist despite China's drive for AI self-sufficiency and the US Pax Silica initiative to secure its own AI supply lines. Washington restricts supplies of top-line chips and chipmaking technology to China and has limited US investment in sensitive AI-related sectors there for several years, but the rules contain a carve-out for publicly traded securities.

"US and Chinese businesses and investors continue to maintain connectivity and invest in each other despite highly volatile geopolitical conditions," said Fred Hu, founder and chairman of private equity firm Primavera Capital Group. He said the summit could "inject more certainty and energy" into the financial relationship.

US Treasury Secretary Scott Bessent said he and Chinese Vice Premier He Lifeng discussed setting up a US-China AI dialogue this week, with a notification system for common goals and threats.

For investors, the mutual exposure acts as a safety net that gives both sides an interest in keeping relations steady, while holding expectations low for the Trump-Xi meeting to break new ground. It could also unwind painfully if ties deteriorate further.

Wall Street underwriting Chinese tech IPOs amounts to "clipping the ticket on both sides of a cold war," said James Buckley-Thorp, founder and CEO of AI company Atlian. He said US technology restrictions could help rather than hinder interest in China's domestic tech players. "There'll be two internets, two chip stacks, two rulebooks, and your portfolio needs a passport for both," he said.

Frictions remain close to the surface. Thilo Hanemann, a partner at Rhodium Group, said wealthy Chinese investors keep putting money into US tech through offshore funds, "but there is very limited visibility into these fund structures and thus the magnitude of exposure." At least one US lawmaker has criticised JPMorgan Chase and Bank of America for underwriting the Hong Kong listing of Chinese battery giant Contemporary Amperex Technology Co, which the US says has ties to China's military. Washington is also adding more Chinese tech companies to its list of firms it believes aid Beijing's military, and SpaceX's website and IPO materials were inaccessible in Hong Kong and mainland China ahead of its listing in June.

Still, investors on either side of the so-called "Silicon Curtain" want to spread their bets for now. "There probably won't be a single winner in the U.S.-China AI race," said Xile He, co-founder and CEO of San Francisco-based AI start-up BrentX. "From an investor perspective, I think betting entirely on one side is a big risk."