Hi, this is Evelyn, writing to you from Beijing. Welcome to the latest edition of The China Connection — a succinct snapshot of what I’m seeing and hearing from local businesses.
My latest conversations with investors reveal a notable shift: China has taken note of how finance powered Silicon Valley’s rise and is following suit. Growing pains and risks aside, this could mean serious competition for the U.S.
The big story
Follow the money behind China’s latest tech boom and it leads to Hong Kong — the most globally accessible of China’s stock exchanges — which roared back to life last year.
Companies raised more funds in public listings on the Hong Kong market than on any other exchange. Now, more than 400 companies are lining up to list — and I’ve heard estimates that are way higher thanks to the exchange’s relatively new confidential listing rules.
“This [surge in Hong Kong listings] will last longer than one or two years,” Gary Lock, Hong Kong-based partner at IPO advisory King and Wood, told me on the sidelines of a venture capital forum in Hangzhou last month.
The current capital markets activity is “much, much bigger” than anything seen in the last 35 years, Lock said. Since the Iran war began two months ago, he said foreign money has flowed into Hong Kong banks, getting ready to invest in China.
More than 40 companies have listed in Hong Kong so far this year, as regulations ease — and U.S. scrutiny of investment into sensitive Chinese sectors (like defense tech) grows.
Critically, the resurgence of capital activity in Hong Kong has helped shake perceptions that it didn’t offer the same scale of trading volume and stock valuations as the U.S., said Jin Yang, chief partner at KPMG China’s Hangzhou office.
And despite reports that Beijing is making it harder for overseas-structured Chinese companies to list in Hong Kong, none of the five investors and advisors I spoke to for this piece were worried it would stop the IPO flow.
Only about 15% of the Hong Kong pipeline may face regulatory scrutiny from China, Goldman Sachs analyst Si Fu said in a report last month. She predicts Hong Kong listings will raise about $60 billion this year, nearly double the $36 billion raised in 2025.
These regulations are also eroding international investors’ competitive advantage in securing startup deals in China, said King and Wood’s Lock, as founders are incentivized to pursue domestic funding.
“Who needs SoftBank,” Lock said, when a local firm can make decisions more quickly and offer better valuations?
Puhua Capital, a major Chinese venture capital firm, does not expect a major change in foreign investment this year, founding managing partner Shen Qinhua told me.
But he expects the Hong Kong IPO momentum to persist. Shen said about 60% of Puhua’s total investments are in “hard tech” such as AI, chips and commercial aerospace.
Hong Kong Exchanges and Clearing CEO Bonnie Chan (C) poses with representatives from newly listed companies on April 17, 2026, the day Manycore Tech, one of Hangzhou’s “six little dragons,” surged in its trading debut.
China News Service | China News Service | Getty Images
A new ecosystem emerges
More Chinese IPOs in Hong Kong are just another step on China’s road to developing its own thriving tech ecosystem. The listings are a critical way for early-stage investors to make potentially significant returns, incentivizing more funds to support Chinese startups as they strive to become global players.
There are growing signs that China is catching up with Silicon Valley and Wall Street in other ways, too, as a younger generation takes the lead.
Previously, Chinese entrepreneurs preferred to maintain control over their companies for as long as possible — making majority-held IPOs the most popular option.
But now, founders — sometimes of multiple startups — are more open to selling their businesses or engaging in M&A, said Zhou Kaibing, head of Hangzhou’s venture capital association. This creates more options for investors to make money, growing the size of the industry.
Things are also changing when it comes to tech itself.
Chinese companies have previously emphasized their focus on building industry-focused AI with immediate business returns, while their U.S. peers were looking to build superhuman artificial general intelligence.
But Qi Ruan, partner and vice president at S&R Venture Capital, said investors in China are increasingly looking for entrepreneurs with a vision for the future, and a clear view of how their tech fits into that.
Globally competitive tech and a growing financial support system helps strengthen China’s attractiveness to foreign investors.
The Hangzhou VC forum attracted guests from as far away as India, Spain and Belgium, Zhou said.
In particular, the delegation from India included more than 20 business leaders ranging from Dharma Capital to industrial giant Tata, according to Vijay K Thadani, vice chairman and managing director of NIIT. He also participated in the week-long trip to China.
The companies are exploring investment opportunities and partnerships with Chinese robotics companies in manufacturing, Thadani said.
And amid cross-border regulatory uncertainty, Ruan hopes her VC firm can expand by emphasizing that it is the only fund in Hangzhou with a license that lets it accept foreign capital while investing directly in Chinese yuan.
This all reflects the fact that global money and innovation are no longer the sole preserve of the U.S.
Still, as the pieces fall into place for China to build its homegrown venture capital ecosystem, it won’t be a replica of the U.S. model.
Regulator surprises are the main risk, Lock said. “A lot of things that we do in this part of the world are policy-based.”
Need to know
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Electric car giant BYD has become the first Chinese business to be raised in the European Parliament over allegations of labor abuses in Hungary, CNBC has learned, following a watchdog’s investigation into working conditions at the site.
CATL plunges more than 8% as the Chinese battery maker unveils $5 billion share placement
Battery giant Contemporary Amperex Technology announced plans to raise about $5 billion to support its push into overseas markets, expand production capacity and strengthen its zero-carbon strategy.
‘Draconian development’ in Meta-Manus deal draws the line in China’s AI race with the U.S.
China’s decision to block U.S. tech giant Meta’s $2 billion acquisition of artificial intelligence startup Manus is being seen by analysts as a warning to tech entrepreneurs.
Coming up
May 6: Shanghai and Shenzhen stock exchanges reopen after Labor Day holiday
May 6: RatingDog China Services Purchasing Managers’ Index (PMI) for April
May 9: China trade data for April
May 11: China consumer price and producer price indexes for April