Talk Your Book: The Bull Case for China With Brendan Ahern

What It Covers

Brendan Ahern from KraneShares explains China's tech sector recovery after 2021-2023 drawdown, AI development through open-source models, manufacturing ecosystem strengths, and potential US-China trade relations improvement under Trump administration affecting investment outlook.

Key Questions Answered

• •China Tech Drawdown Context: KWEB fell 49% in 2021, 17% in 2022, and 9% in 2023 due to Archegos collapse, housing bubble deflation, internet regulation, and COVID policies. Despite price dropping from $103 to $35, assets under management reached all-time highs through consolidation.
• •AI Strategy Difference: China pursues open-source AI development through DeepSeek, Alibaba's Qwen, and Baidu's ErnieBot, contrasting with US closed monetization models. Cloud computing companies like Alibaba, Tencent, and Baidu capture value through implementation rather than licensing large language models.
• •European Investor Flows: European investors allocated $8 billion into China ETFs in 2025 versus $1.5 billion from US investors, despite Europe's ETF market being four times smaller at $3 trillion versus $13 trillion. Currency headwinds drive rebalancing from US equities.
• •Consumer Spending Pattern: Chinese retail sales grow 9% year-over-year with 25% occurring online, but households hoard cash after real estate comprising two-thirds of portfolios declined significantly. Wealth exists but spending remains conservative pending portfolio recovery and consumption-focused policy implementation.