In-Depth Observation: Capital Markets
Looking at the listings of Changxin Technology and Yushu Technology, we can see how China's capital market has upgraded from a financing platform to a national innovation infrastructure.
The New York Times recently used the listings of Changxin Technology and Yushu Technology on the Shanghai Stock Exchange as a starting point to make a highly influential judgment: the global tech capital, which has long been almost unidirectionally "looking west", is now showing a new trend of "looking east".
Changxin Technology's stock price surged approximately 470% on its first day of listing, while Yushu Technology's stock price rose about 460%, with intraday gains exceeding 600% at one point. As a leading Chinese memory chip manufacturer and a company with high recognition in the field of embodied intelligence and humanoid robots, the two companies have been favored by investors, superficially driven by the combined forces of the AI boom, domestic substitution, and robotics narrative, but in essence, reflecting a deeper institutional change underway in China's capital market.
At the core of this shift is not that China suddenly has more capital at its disposal, nor merely that investors have grown more risk-tolerant toward tech stocks. Rather, Beijing is attempting to build a capital formation mechanism for technological innovation that differs fundamentally from the past: previously, the growth of tech enterprises relied more heavily on fiscal subsidies, bank credit, local government investment promotion, and overseas venture capital. Now, the aim is to have domestic equity investment, securities markets, M&A funds, and long-term institutional capital jointly assume the functions of technology screening, resource allocation, risk sharing, and exit realization.
It's more accurate to say that China is rebuilding its pricing power over domestic tech assets, rather than simply saying capital is "flowing east". This judgment is more accurate and worthy of serious consideration by mainland China and Hong Kong capital markets.
Rather than saying capital is simply "flowing east", it's more accurate to say that China is rebuilding its pricing power over domestic tech assets. This judgment is more accurate than "capital looking east" and is worth serious consideration by mainland China and Hong Kong capital markets.
China's Capital Market Shifts from Financing Channels to National Innovation Infrastructure
For a long time, the primary function of China's capital market in the macro economy has been understood as helping enterprises finance themselves, supporting state-owned enterprise reform, and providing residents with wealth management tools. However, this positioning is now changing. The capital market is starting to be embedded in the core aspects of the country's technological innovation and modern industrial system construction, taking on some of the functions that were previously mainly undertaken by the fiscal authorities, banks, and local governments.
This change is reflected at the institutional level. In June 2026, the China Securities Regulatory Commission explicitly proposed expanding the scope of application of the fifth set of listing standards for the Sci-Tech Innovation Board, actively supporting the listing of high-quality artificial intelligence large model enterprises, and supporting more hard technology enterprises in fields such as quantum technology, biomanufacturing, and embodied intelligence to enter the Sci-Tech Innovation Board. Subsequently, the Shanghai Stock Exchange issued a special guideline, allowing high-quality artificial intelligence large model enterprises that have not yet formed a certain scale of revenue but have obvious technical advantages, phased achievements, and large market space to apply the fifth set of listing standards.
Meanwhile, regulatory requirements stipulate that applicant companies must have at least one large model product that has been launched and achieved scale application. This indicates that institutional inclusiveness does not equate to the cancellation of business verification, but rather shifts the focus of evaluation from current profits to technological barriers, product implementation, and future industrial value.
The listings of Changxin Technology and Yushu Technology are landmark events marking this shift in the system. They represent not just the financing of two ordinary companies, but rather the beginning of two national strategic industries receiving large-scale, sustainable capital support through the public capital market.
In this sense, the capital market is no longer just the endpoint of industrial development, but is becoming part of the process of industrial formation. A company's initial public offering is not just an exit channel for founders and investment institutions, but a strategic platform for raising research and development funds, integrating the industrial chain, attracting talent, implementing mergers and acquisitions, and establishing industry standards. Whoever can form a capital loop facing future industries will be more likely to have the ability to continuously innovate in the next round of technological revolution.
Real Change Lies Not in Government Withdrawal, But in Shift of Intervention Approach
A New York Times article noted an important shift: China wants to reduce its reliance on subsidies for high-cost, inefficient industries and instead let investors decide which companies are worthy of capital. This direction is largely correct, but it's inaccurate to interpret it as the government withdrawing from tech industry investments.
China is forming a model that is closer to "the government providing long-term capital and a systemic framework, with the market responsible for project screening and dynamic pricing." The government is transitioning from directly subsidizing enterprises to establishing mother funds, guiding funds, and merger and acquisition funds, using limited fiscal funds to leverage insurance, bank wealth management, industrial capital, local funds, and social capital to jointly invest in early-stage tech companies.
The National Development and Reform Commission disclosed that the national venture capital guidance fund and three regional funds have begun operations. In 2026, it will also promote the establishment of a national-level M&A fund to address difficulties in venture capital exits and insufficient capital turnover efficiency. The related mechanisms are expected to channel and leverage over 1 trillion yuan in various types of capital.
This means the tools of China's industrial policy are shifting from "how much money to hand companies" toward "whether a market mechanism can be established that allows capital to continuously enter, exit, and reinvest." Subsidies can only address one-off R&D spending or capacity construction; capital markets, by contrast, create a cycle: early-stage funds absorb technological uncertainty, securities markets provide scale financing and exit channels, M&A markets drive resource reallocation, and the proceeds from exits flow back into the next round of innovation.
However, whether this model can succeed depends on whether the government stays within its boundaries. The government can be an institutional designer, a long-term capital provider, and a stabilizing force in extreme market conditions, but it is not suitable to be a guarantor of valuation in daily transactions, and it cannot allow the market to form a one-way expectation that "as long as it belongs to a national strategic industry, its valuation will not decline".
If investors believe that policies will bail out all strategic tech companies, market-based screening will degenerate into another form of implicit subsidy, and capital may shift from supporting innovation to chasing policy labels.
Pricing power for tech assets is becoming a core issue for the next decade
Looking East Doesn't Mean Global Capital Has Reversed Course
"Global capital is shifting its gaze from the West to the East" is a striking headline, but from a factual perspective, this judgment is still somewhat premature.
The strong post-listing performance of Changxin Technology and Yushu Technology first and foremost demonstrates that domestic investors in China are willing to provide capital for strategic tech assets, and does not directly prove that global funds have massively shifted from the US market to the Chinese market.
What is actually happening is that the capital cycle of Chinese tech companies is gradually shifting from "overseas financing - overseas listing - overseas pricing" to "domestic capital cultivation - multi-market listing at home and abroad - autonomous pricing of Chinese assets".
In the past, Chinese internet companies generally relied on US dollar venture capital, offshore structures, and the US capital market to achieve growth; today, against the backdrop of intensified geopolitical tensions, technological regulation, data security, and cross-border investment scrutiny, overseas capital's willingness and space to invest in China's cutting-edge technology have clearly shrunk. China must establish a domestic capital system that can support the continuous operation of technological innovation even when external capital is insufficient or even deliberately blocked.
This is not just a simple relocation of funds, but a change in the right to form capital and the right to price assets. Whether a country can have a truly complete technology industry system depends not only on whether it has laboratories, engineers, and manufacturing capabilities, but also on whether it can identify high-risk technologies, tolerate long-term losses, provide reasonable valuations, and allow failed projects to exit in an orderly manner.
However, independent pricing should not be misinterpreted as financial closure. Overseas capital brings not only funds, but also global customers, industrial networks, governance standards, talent mobility, and cross-border M&A capabilities. China needs to reduce its dependence on a single overseas financing channel, but it should not give up on utilizing global capital and global markets.
True maturity in "looking east" is not about shutting out Western capital, but rather enabling Chinese companies to attract and utilize global capital on more equal terms after establishing a solid domestic capital foundation.
A Surge in Numbers on the First Day Signals Both Success and Risk
The sharp rise of Changxin Technology and Yushu Technology after their listing reflects investors' strong confidence in domestic semiconductors, artificial intelligence, and embodied intelligence industries, as well as the insufficient supply of high-quality strategic tech assets in the market. In a scenario where liquidity is abundant but quality assets are scarce, funds tend to concentrate their expectations for the industry's long-term prospects on a limited number of targets, thereby forming a significant "strategic asset scarcity premium".
However, strategic importance cannot be directly equated with investment value, and technological advancement does not automatically translate into sustained cash flow.
The storage chip industry is characterized by massive capital expenditures, rapid technological iteration, and a pronounced price cycle. Humanoid robots, while offering vast market imagination space, still face uncertainties regarding the timing, cost, product reliability, and customer willingness to pay for large-scale commercial applications. A multi-fold increase on the first day of listing may indicate that the issue price failed to fully reflect market demand, or it could mean that short-term prices have already factored in growth expectations for several years.
If the Chinese capital market only solves the problem of whether tech enterprises "can list" but fails to address the issue of "how to continuously price after listing", the reform may ultimately create a batch of high-valuation companies rather than high-quality companies.
The STAR Market's expansion of its inclusiveness to unprofitable and cutting-edge tech companies is necessary, but the more inclusive the entrance, the stricter the ongoing supervision and exit mechanisms need to be. For these companies, information disclosure cannot only focus on operating revenue and net profit, but also needs to continuously disclose R&D milestones, core technology iterations, large-scale applications, customer concentration, unit economic models, intellectual property, supply chain security, and the efficiency of fundraising usage.
Capital markets support technological innovation not by eliminating risk, but by making it public, tradable, and exitable. The market can tolerate companies without temporary profits, but it cannot tolerate technological narratives replacing business verification in the long term, nor can it turn national strategies into valuation exemptions.
Shanghai and Hong Kong Are Not a Zero-Sum Game
The New York Times' narrative mainly compares Shanghai to US capital markets, but overlooks Hong Kong's unique position in China's tech capital system.
China aims to establish a comprehensive technology capital market, which cannot rely solely on the domestic market, nor can it simply view Hong Kong as a substitute for offshore financing. Shanghai addresses issues related to domestic long-term capital, strategic industry financing, and renminbi asset pricing, while Hong Kong addresses issues related to international capital connections, cross-border mergers and acquisitions, global investor coverage, offshore renminbi, and international governance certification. The two have different functions but can be complementary to each other.
Hong Kong's capital market is also not in a state of passive contraction. According to Hong Kong Exchanges and Clearing data, in the first seven months of 2026, a total of 104 companies were newly listed in Hong Kong, with IPO financing reaching HK$328.2 billion, up 154% year-on-year. During the same period, the average daily turnover of the securities market reached HK$286.8 billion, up 18% year-on-year.
Hong Kong has also established a listing mechanism for 18C specialist technology companies and provides pre-listing communication, confidential application submission, and more targeted review support for specialist technology and biotechnology companies through the TECH specialist technology enterprise channel.
The truly noteworthy trend is not who is "poaching" IPO projects from whom, but rather that an increasing number of Chinese tech companies may utilize both the mainland and Hong Kong markets: first completing international financing and global pricing in Hong Kong, then returning to the STAR Market to obtain domestic strategic capital; or first establishing industry status on the A-share market, then expanding to Hong Kong to attract international shareholders, conduct overseas M&As, and develop global businesses.
If the A-share and Hong Kong markets can form a more efficient dual-primary listing, refinancing, Shanghai-Shenzhen-Hong Kong Stock Connect, and cross-market valuation linkage mechanism, Chinese tech companies will not have to choose between "autonomous control" and "international capital".
For Hong Kong, the pressure is also very real. As the mainland capital market begins to be willing to pay higher valuations for semiconductors, artificial intelligence, robotics, and future industries, Hong Kong can no longer rely solely on the convenience of listing rules and the historical advantage of being an international financial center to attract companies.
Hong Kong must further enhance the liquidity of its secondary market, develop long-term institutional investors and research systems that cover hard technology, strengthen the functions of yuan financing and cross-border M&A, and form a truly complementary relationship between the 18C and TECH channels and the mainland's sci-tech innovation board system. Otherwise, Hong Kong may have a listing channel but gradually lose its ability to price China's core technology assets at their initial public offering.
Next Stage to Focus on Improving 'Capital Quality'
Cutting-edge technology requires not hot money chasing short-term gains, but rather patient capital that can understand technology cycles, accept the probability of failure, and accompany enterprises for over a decade.
Insurance funds, pension funds, industrial capital, public funds, and government guidance funds should form a layered division of labor. In the early stage, venture capital and industrial capital bear the technology validation risk; in the growth stage, private equity and government guidance funds support scaling; after listing, public funds, insurance, and pension funds provide stable long-term holdings; and buyout funds offer an exit channel for companies that possess technological value but fail to achieve an independent listing.
The success of the capital market cannot be measured solely by the number of IPOs and first-day gains, but also by how many companies have truly formed global competitiveness five years after listing, how much R&D investment has been converted into products, profits, and cash flow, and how many failed projects have been cleared out in an orderly manner through M&A or delisting.
If domestic capital merely replaces overseas capital, replicating the same valuation bubble and short-term exit logic at home, then the so-called "looking east" has not changed the nature of capital; only when capital can more patiently support technology, more professionally identify risks, and more strictly constrain governance, and regards industrial growth rather than stock price increases as the source of value creation, can China's capital market truly complete its institutional upgrade.
In Conclusion: What Truly Needs to Shift East is Pricing Power, Not Funds
The listings of Changxin Technology and Yushu Technology indeed mark the beginning of a new phase for China's capital market. This indicates that China has a sufficiently large pool of savings, industrial foundation, and investor base to provide large-scale capital for domestic strategic tech enterprises. It also shows that following changes in the external financing environment, China is accelerating the development of its own tech capital cycle.
It's still too early to claim that global capital has shifted its focus from "looking west" to "looking east". The sharp rise of two new stocks can be a sign of a shift in the system, but it cannot be taken as proof of the maturity of the capital market.
The true test lies not in the first day of listing, but in the next five to ten years: whether these companies can convert the high valuations given by the market into continuous research and development, scaled revenue, global competitiveness, and shareholder returns; whether regulators can establish a stable boundary between supporting innovation and protecting investors; and whether the mainland and Hong Kong can jointly build a multi-tiered capital market that is both autonomous and globally oriented.
Thus, the most important task for China's capital market in the next stage is not to prove that capital has "flowed east," but to demonstrate that China has the capability to independently, professionally, and sustainably price tech innovations.
Capital flows can change with the cycle, but what truly determines a country's technological competitiveness is its capital formation mechanism, industrial judgment capability, and institutional credibility.
What truly needs to move east is not capital, but pricing capabilities.
Interactive Topics
How do you view the expansion of the "fifth set of standards" for the Sci-Tech Innovation Board? Will it drive the rise of genuine hard technology or create a new round of valuation bubbles? Share your thoughts in the comments section.