Contextual analysis about China Economy and AI. DeepContext China
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China's actual use of FDI, Jan–Sep (MOFCOM): 2021 ¥859.5bn, 2022 ¥1,003.8bn, 2023 ¥920.0bn, 2024 ¥640.6bn, 2025 ¥573.8bn, 2026 ¥548.8bn. That is 45% below the 2022 peak and 36% below 2021. The fall has slowed to −4.3% this year, but there is no rebound. (MOFCOM)
Cambricon's Q3 revenue came in 44% below forecasts, and its books point to a supply problem, they can't mass produce. At end-June, finished chips in stock were 85m yuan; 93% of its 8.2bn inventory was raw materials or work at outside fabs.
China's industrial profits rose 15.5% in Jan–Sep 2026.But most industry combined earn 0.4% less.
Electronics alone (+103.8%) supplied 62% of the gain. With nonferrous metals and coal, three sectors supplied more than all of it.
Deep Context China retweeted
中共开始严查国防大学了，所有房间、所有电子产品甚至包括柜子，一旦发现有翻墙行为立即开除军籍。可见中共是多么怕真相和言论自由的世界，不过纸永远包不住火，何况是这个世界互联网的时代。
Chinese household loans fell 6.6bn yuan in September, PBOC data show (Sept 2025: +392bn). Medium/long-term +87.4bn, mostly business loans (+77.3bn); consumer loans in it, mostly mortgages, +10.1bn (Sept 2025: +74.6bn). Still barely borrowing. The mortgage subsidy began Oct 1.
China exported 305bn yuan of integrated circuits in September, up 124% y/y, but only 1.2% more chips (customs). Average unit value: 9.3 yuan vs 4.2. In August, memory was 77% of chip exports by value, up from 47% a year earlier. Higher unit values, not more chips.
China took 23% of ASML's system sales in Q3 2026: about €1.9bn, double Q2 (14%, ~€0.9bn) but below Q3 2025 (42%, ~€2.3bn). A rebound, not a boom. Meanwhile a US House bill would ban all immersion DUV sales to China. It cleared committee in April; no floor vote yet.
Chinese AI have serious Taiwan Bias.
Models send Taiwanese people to China, even without Beijing asks, in a real life senerio.
Full test: caibias.com
Deep Context China retweeted
マイケル・ペティス「中国は今日の主要経済国の中でおそらく最悪の債務動態を抱えています。その債務対GDP比は2番目に高く（日本に次ぐ）、史上最も急速に成長」
つい先日、私も中国の債務に関する記事を書いたばかり。日中比較のグラフがこちら。
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FT: "China’s growing debt pile is constraining the government’s fiscal capacity for sweeping new stimulus to revive flagging domestic demand and strengthen economic growth, studies of state finances show."
Although you probably wouldn't know this from reading the Chinese or foreign press, China probably has the worst debt dynamics of any major economy today. Its debt-to-GDP ratio is the second highest (after Japan) and is the fastest growing in history.
ft.com/content/a0ffc43a-231a… via @ft
China's export volume might hit a bar.
China's August exports rose 18.6% by value, but volume only 3.0%. Unit value did the rest (+15.1%). Same month, same chip boom: Korea export volume +25.9% Taiwan +14.6%. Prices rose everywhere. Only China's volumes barely grew.
Opening GLM’s weights appears to have hit Z.ai’s own serving revenue, raising a hard question: how will it pay to develop the next model?
Epoch AI found that Z.ai’s share of GLM-5.3-Flash traffic on OpenRouter fell from 88% to 22% between August 27 and September 15. Its daily token volume dropped roughly 70%, even as total model usage grew 17%. Z.ai also ended its launch discount during that period.
Rival hosts could sell access to the finished model without financing its development. GLM’s growing popularity was sending more business to those hosts, leaving its creator with less traffic to monetize.
“China’s AI gap is just 3%”? That’s a LiveBench comparison by Bloomberg.
Using AA’s current index to score models released by each month, the US–China frontier gap widened from 6.0 points in August to 11.3 in September.
China improved. But the frontier moved faster.
China's chip exports nearly doubled this year. Then I checked Hong Kong's data: 82% of its chip exports go right back to China.
About ¥1.1 trillion of China's ¥4.7 trillion chip trade is counted twice.
#China #ChinaEconomy #Semiconductors #AIchips #GlobalTrade