You've probably noticed for a while that Chinese tech stocks have been going up very fast. Alibaba, for example, has risen by nearly 50% since the beginning of the year. Chinese stocks have always been very cheap, but they've been crawling for years. So what happened that suddenly made them start to rise so fast? There are a few reasons, of course. One is that stocks in America have risen a lot and money is looking for new cheap places to go. A second reason is signs that China-America relations will not be as bad as expected. In fact, there are signs that Trump and Xi Jinping are getting better. Another important issue is the increasing possibility that China will resort to monetary easing. Because the Chinese economy really has deep problems. Another issue is the atmosphere created by DeepSeek. There are some indicators that China is not that far behind America in technologies like artificial intelligence, and last but not least, I think the most important thing is that the Chinese government, the Chinese Communist Party and Chinese President Xi Jinping are changing their attitude towards technology companies. As a result of all this, the Hang Seng Tech Index reached its highest level since February 2022. But a very important peak took place.

The Chinese government has shown that it is getting closer to technology companies. Xi Jinping personally hosted technology giants and the ice melted. The state media broadcast the meeting very strongly. Alibaba founder Jack Ma, Huawei founder Ren Zhengfei, Xiaomi's Lei Jun and Meitu's Cai Wensheng made a great broadcast about this summit where such big names took the stage with Xi Jinping. The meeting was perceived as a clear signal that Beijing will once again support the private sector, especially the technology sector, and this will probably continue to benefit technology stocks. So why did the state and Chinese technology companies fall out?

Actually, everything happened after Alibaba's giant public opening in 2014. Many people suddenly became rich. They started to bother the communist party with their lifestyles and exaggerated wealth. On the other hand, they started to express their views. Such things are not liked in authoritarian regimes. In 2022, Jack Ma made a very controversial speech in Shanghai. He really put the government in a difficult situation. Then he disappeared and the state collapsed on technology companies like a nightmare. Ant Group's record-breaking IPO was suspended. Then, some regulations that greatly affected Alibaba, Tencent and Didi and caused them to suffer came into effect. For example, young people were banned from playing games. Many restrictions were imposed on the financial technology sector and China began to collapse. On top of that, the problems experienced in China's economy due to the environment created by Covid, and technology companies really became free. In 2023 and later, the government slowly began to soften. Both companies made some concessions. And the government began to soften. For example, Didi started accepting customers in its app store again after a long time. It lifted some restrictions. Because it got rid of the antitrust case against Amazon. Ant Group closed a 3-year investigation with a fine. Those troubles were over and things started to calm down a bit. Also, Jack Ma was no longer around for a while. I thought he might have even been killed, but he came back, took over the business again, and we see him around, albeit with a slightly lower profile. So why did all these moves happen? Because Beijing understood that these things cannot go without technology companies. There are two reasons, one is that the restrictions imposed by America are very serious, especially on microchips and artificial intelligence, and China is aware that these are very critical sectors. If these restrictions are going to continue, China needs to develop its own technology. Second, there is serious youth unemployment in China. They don't even report that data anymore. There are very serious problems in the housing market, there are problems in the financial markets.

For all these reasons, China needs new growth engines. It is certain that this will not only happen with housing. It will not happen by only selling cars either. Because when they focus too much on physical products, this time customs walls start coming from Europe and America. It is not possible to go from there either. In this case, Beijing saw returning to technology as a solution. It was within this framework that the meeting took place, completely open to the public and in a very dramatic atmosphere. State media showed President Xi entering the summit amidst the applause of a group of billionaire founders. The atmosphere was very different. Beijing and technology companies said to each other, "We need you."

So, do these developments really mean that China will now be a more democratic state, and that Chinese entrepreneurs, like entrepreneurs in America, will be able to say whatever comes to their mind? No, of course not. China continues to be an authoritarian state. For example, when you search on DeepSeek, it does not seem to yield results for searches about China being an authoritarian state or some of its past bad practices. That structure will continue as is, but they are trying to return to a more reasonable relationship.

By the way, the same thing is happening in the USA. While Silicon Valley and the state were not on good terms in America, that is also improving rapidly. Silicon Valley is currently very supportive of Trump. For example, while Google never got involved in defense projects, it is now slowly starting to look favorably on defense projects. The same thing is happening in China. The state and technology companies are making peace in China. All of these create an optimistic atmosphere among investors towards technology companies. Since Chinese companies are already cheap, there is a lot of money flowing in. Reports have been published on where large investment funds in America invest and where they exit, and we have seen that there is serious demand for Chinese stocks. That's why stocks are active and if Xi Jinping continues this attitude, the movement may accelerate even more.

But let's not forget that this is an authoritarian state. It is useful to approach with cautious optimism. Everything can turn upside down at any moment. But right now, Chinese technology companies are popular and the Chinese president has a great influence behind this. Yes, this is the situation, one of the most important trends in the investment world these days is the China trend. I tried to explain the reasons for it a little. If you liked what I said, a like would be great.