FOREIGN financial institutions are finding a stronger investment case in China’s hard-tech industries as breakthroughs in AI, semiconductors, and advanced manufacturing are driving more exports, higher earnings, and growing interest from global investors.

China’s high-tech exports surged over 50% year on year in July, well ahead of the 17.8% growth in total exports, customs data showed. The export gains are being mirrored in investment flows, with foreign funds moving into Chinese technology stocks and global indices adding newly listed hard-tech companies.

Rob Subbaraman, head of global macro research and co-head of global markets research at Nomura, said China’s low-cost and abundant electricity supply, growing talent pool and early lead in physical AI are driving the rapid development of its AI industry chain.

China’s development of open-weight models could accelerate their adoption by businesses, allowing productivity gains from AI as a general-purpose technology to spread more quickly across the economy, he said, citing models from Chinese firms including DeepSeek and Moonshot AI.

China’s strength in advanced manufacturing has also become increasingly evident, said Robin Xing, chief China economist at Morgan Stanley, pointing to China’s roughly half share of global installed new energy storage capacity and the rapid growth in outbound licensing deals for innovative drugs. These trends, he said, underpin the long-term investment case for China’s hard-tech sector and leading manufacturers.

These strengths are increasingly being reflected in foreign investors’ allocation decisions. This year, Goldman Sachs has twice raised its 12-month target for the CSI 300 on improving earnings momentum, and retained an overweight view on Chinese equities.

Kinger Lau, chief China equity strategist for Goldman Sachs Research, said the bank’s positive view reflected improving earnings momentum, favorable macroeconomic and liquidity conditions. A-share equities offered international investors diversification benefits that remained underappreciated, along with attractive exposure to hard-tech and AI themes, he added.(Xinhua)