China Daily Briefing

SCMP Business reports that DSpark, a system built on DeepSeek's architecture, is materially easing inference bottlenecks and reducing chip strain — translating directly into lower AI operational costs for Chinese internet platforms. This is the kind of deflationary AI cost signal that re-rates the margin profile for NTES, PDD, and Tencent's cloud businesses. NetEase +7.74% today is the clearest expression of the market pricing in lower AI compute expenses improving unit economics. For investors tracking China's AI stack vs the US model, DSpark's efficiency gains represent the domestically-derived alternative to Nvidia-dependent infrastructure — technically significant given US chip export controls that block China's access to the H100/A100 generation. The trend is lower inference cost, higher AI-platform margin, and KWEB as the primary beneficiary.

SCMP Business reports that as AI pushes data centers to capacity limits, Chinese semiconductor companies are making a calculated bet on silicon carbide (SiC) as the enabling material for next-generation power management in GPU-dense server environments. The play: SiC enables higher-efficiency power conversion, reducing cooling load in hyperscale data centers — exactly the bottleneck China's domestic AI buildout faces without access to TSMC's cutting-edge nodes. This is the China chip-independence story playing out at the materials layer, one level below the logic chip debate. The medium-term read: Chinese SiC chipmakers get a structural tailwind from every dollar of domestic AI data center capex, insulated from US export control lists because SiC power devices are not yet restricted. Watch the STAR Market listings in this space.

The Bank for International Settlements published a warning that the AI investment boom is creating concentrated risk across global portfolios, with a potential sharp crash if sentiment turns. SCMP Business covers the BIS note's specific concern: investors are crowded into AI-adjacent names without adequate stress-testing for a valuation reset. For China specifically, this cuts two ways — bearish for KWEB bulls who are adding at +1.31% today, but also a rationale for why BABA and TCEHY are underperforming despite the sector tailwind (institutional risk managers are trimming the largest positions). FUTU Holdings -1.75% as the session's top loser among China ADRs is consistent with this: FUTU's retail trading volumes are a sentiment proxy, and risk-off by institutional investors reduces retail activity. The BIS flag is a yellow light, not red — but worth watching if the A/H premium widens next week.