China’s $70 Billion Chip Gambit: A Bold Move to Slash Export Dependence

Beijing is throwing another massive pile of cash at its semiconductor problem. The goal? To finally break free from foreign tech chains.

The Price of Independence

Forget subtle policy nudges. This is a full-scale financial offensive aimed at one of the most critical bottlenecks in modern geopolitics. The sheer scale of the commitment—$70 billion—speaks to the urgency Beijing feels. It's not just about building chips; it's about building a wall.

Cutting the Cord

The plan bypasses years of incremental progress for a shock-and-awe approach. It funds everything from cutting-edge fabrication plants to homegrown design software, actively creating a parallel supply chain. The message to global markets is clear: prepare for a decoupled future.

The Finance Angle

While $70 billion might make a venture capitalist blush, in the grand scheme of state-backed industrial policy, it's just another line item. The real cost, of course, will be measured in duplicated global capacity and the efficiency losses that come with fragmentation—a classic case of geopolitical security trumping capitalist rationale.

This isn't an investment; it's an insurance policy with a brutally expensive premium. And the entire tech world is now on the hook for the deductible.

Beijing plans subsidies outside existing chip funds

At the top end, the proposal would become the largest state-backed semiconductor incentive program ever planned. It comes as governments across Europe and the Middle East push to secure local chip supply for AI systems and national security uses.

The Chinese package would operate separately from existing funding tools, including the roughly $50 billion Big Fund III, which focuses on equity investments.

The timing is sensitive. China is deploying capital into the world’s biggest semiconductor market during a tense geopolitical period.

President Xi Jinping has committed to building chip capacity using a “whole-nation” approach, calling for resources across government, industry, and finance to be mobilized together. Xi has linked the push to repeated U.S. export controls imposed under three administrations, starting with Donald Trump’s first term.

Semiconductor Manufacturing International, China’s largest contract chipmaker, continues expanding production as Huawei’s main manufacturing partner, despite lacking the advanced tools required for the most cutting-edge chips. At the same time, Moore Threads Technology Co., which designs AI accelerators, has seen its shares climb more than 600% since listing in Shanghai.

Companies have reportedly been urged to avoid Nvidia’s H20, a reduced-performance chip designed to comply with U.S. export rules. Nvidia executives have said the company’s share of China’s AI chip market has dropped to zero.

Beijing has not publicly approved imports of Nvidia’s H200, despite the recent policy shift in Washington.

Economic meeting sets broader policy tone

Beyond chips, China has signaled it will maintain economic support while avoiding a major stimulus expansion next year. An official readout released Thursday after the Central Economic Work Conference said policymakers will “flexibly and efficiently” use interest rate cuts and reserve requirement reductions to keep liquidity sufficient. The same document said officials will keep a “necessary” level of budget deficit and government spending in 2026.

The meeting, attended by senior leaders including Xi Jinping, set priorities for the coming year. Officials said they aim to halt the sharp decline in investment, stabilize the housing market, and address falling birth rates.

The tone reflected confidence after China weathered its trade conflict with the U.S. with help from strong exports to other regions, allowing leaders to stick with a manufacturing-led growth model while nudging consumption.

Chinese property stocks rose, with a Bloomberg gauge of Chinese property shares gaining as much as 1.9%. China Vanke Co. shares ROSE as much as 5.7% in Hong Kong, while KWG Group Holdings and Sunac China Holdings climbed 5.3%

Get up to $30,050 in trading rewards when you join Bybit today