In recent days, the financial landscape has witnessed significant movements, particularly in the stock and bond marketsIt appears that a wave of optimism has swept through the A-share market, largely driven by tech stocks, since 10 AM this morning.

The shift in market sentiment was further underscored by a recent report published by Deutsche Bank titled "China Devours the World." This report highlights a notable trend: by 2025, the investment community is likely to recognize China's ascendancy over other global markets.

The stark reality is that it's becoming difficult to deny that Chinese companies are providing greater value for money across diverse manufacturing sectors, and are also making strides in the growing service sectorLower pricing, coupled with often superior quality products, positions China as a formidable player on the global stage.

Given the premium investors are paying for dominance, many experts predict that the current discounts associated with Chinese stocks will soon vanishThe report anticipates that policies will increasingly favor consumer spending over production, alongside potential financial liberalization, which could unexpectedly enhance profitability during this cycleNotably, a bull market for Hong Kong and Chinese stocks is anticipated to commence in 2024, expected to surpass previous peaks by mid-2025.

Historically, China's rise to dominance in global markets initially began in apparel, textiles, and toys, but has since expanded into electronics, steel, shipbuilding, and more recently, appliances and solar energyFor instance, the country has made significant inroads into complex industries such as telecom equipment, nuclear energy, defense, and high-speed rail technology, where it has often been underestimated by global investors.

By the end of 2024, China is expected to dominate global automotive exports, flooding the international market with competitively priced electric vehicles that are not only powerful but also aesthetically pleasing

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This upsurge in innovation has attracted worldwide attentionAs we enter 2025, China plans to unveil its sixth-generation fighter jet and the cost-effective artificial intelligence system, DeepSeek, within a span of just one week.

Mark Anderson has aptly described the launch of DeepSeek as the "Sputnik moment of artificial intelligence," which also serves as a recognition of China's intellectual property achievementsThe country is now rapidly expanding its competitive edge in high-value-added sectors and dominating supply chains globally.

It is essential to consider that global investors remain starkly underinvested in China, reminiscent of the prior avoidance of fossil fuels before market realities forced changes in directionThe current low exposure of funds to China mirrors previous trends, notably in industries led by innovative companies with robust economic moatsSurprisingly, today these economic moats are predominantly associated with Chinese enterprises rather than Western ones.

Markets behave predictably; when conditions improve, many leap at the chance to proclaim their enthusiasm, but when sentiment wanes, a cloud of pessimism envelops the discourseYet, regardless of perception, the world remains unchanged, and so too does China in its essence.

I have consistently maintained the view that both the world and capital markets are underestimating ChinaWith its vast manufacturing capabilities, a massive unified market, and a pool of affordable, skilled labor, China is poised to leverage its scale in impactful and unforeseen ways across various sectorsThe formidable advancements in high-tech industries, like the sixth-generation fighter jets and DeepSeek AI, epitomize the type of qualitative breakthroughs that arise from significant quantitative growth.

The introduction of the sixth-generation fighter jet marks a fundamental shift in strategic balances, leaving questions of time as its only remaining variable

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This is akin to an exemplary student whose performance can often take observers by surprise, highlighting their potential and significance.

Both the sixth-generation fighter jet and the DeepSeek AI share a characteristic: they represent premium technologyTheir emergence denotes that China has reached a level of confidence in its strategic security that does not fear challenges, even from well-established global powers such as the United StatesThe narrative of China being unable to develop advanced chips is increasingly tenuous, especially as domestic firms like SMIC edge closer to achieving 7nm process technology milestones.

Meanwhile, the global investment landscape reflects a growing realization that sticking closer to the U.S. may not guarantee safety or returnsAs events over the past month have revealed, assumptions that seemed stable have shown cracks, leading investors to reassess their positionsRather than being passive recipients of market flows, they're starting to explore the potential for symbiotic investments.

On the U.S. side, a paradox is emerging; despite an inflated stock market, the underlying economic conditions appear troublingRecently, Elon Musk's actions have incited protests against him encapsulated by the slogan “keep Musk Out!”, signaling discontent with dominant figures in American industry.

History teaches us that reform often arises from dire circumstances, as seen throughout various Chinese dynasties where genuine change required harsh conditionsConversely, the prospect of revolt gains traction only when a society confronts unyielding hardship, a phenomenon often absent when comfort prevailsWhen the populace is sufficiently fed and secure, risk-taking becomes less attractive.

Thus, reform tends to be difficult while revolutions, propelled by the sheer necessity of survival, are comparatively easier to ignite

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