China Market Weekly Update

This week's investment landscape highlights China's growing prowess in AI and embodied intelligence. Linkerbot's achievement as the only company globally to mass-produce high-DOF dexterous hands marks a significant milestone, with its products demonstrating superior durability (10x international competitors) at just 1/30 the cost. Their Linker Hand series boasts 42 degrees of freedom, far exceeding international competitors, with monthly sales exceeding 1,000 units. The company has also established the world's largest dexterous operation dataset, DexSkill-Net, positioning China at the forefront of embodied intelligence hardware and data development.

The new energy vehicle sector continues to demonstrate strong growth and international expansion. Leapmotor's partnership with Grimaldi Group to export vehicles to Europe represents the growing international recognition of Chinese EV innovation. With year-to-date sales reaching 271,793 units (149% year-on-year growth), Leapmotor is also expanding its business scope by supplying self-developed battery packs. Meanwhile, Harmony Smart Travel's new Zhijie model garnered over 20,000 pre-orders in just 8 hours, and the brand announced investments exceeding 10 billion yuan with research team expansion to 5,000 people, demonstrating Huawei's ambitions in the intelligent vehicle sector.

In advanced technology fields, we see continued development across semiconductors and data storage. Huawei's release of the all-flash distributed storage OceanStor Pacific 9926 achieves 16x higher capacity density and 4x single-node bandwidth compared to traditional HDD, with 3x improvement in reconstruction efficiency. This breakthrough addresses the massive data storage demands of the AI era. The successful recruitment of over 4.5 billion yuan by Xinchen Capital for its M&A fund, with insurance funds comprising over 70%, signals strong institutional investor confidence in China's economy and M&A market.

Market dynamics and economic data show gradual recovery in the Chinese economy. The July core consumer price index (CPI) rose 0.8% year-on-year, with the growth rate expanding by 0.1 percentage point compared to the previous month, marking the third consecutive month of growth and reaching the highest level since March 2024. July's CPI turned from a decline to a 0.4% month-on-month increase, while remaining flat year-on-year. The producer price index (PPI) declined 0.2% month-on-month, with the decline narrowing. These indicators suggest that the economy is gradually warming up with policy support.

The domestic automobile market continues its structural transformation, with domestic brands capturing 64% market share in the first half of the year, up 7.5 percentage points from the previous year, challenging joint venture brands. This shift reflects the growing competitiveness of Chinese automotive technology, particularly in the new energy vehicle segment, and signals a significant restructuring of market dynamics in this pillar industry.

Notable investment opportunities are emerging in high-tech industries with strong policy support, including brain-computer interfaces, embodied intelligence, and artificial intelligence. The healthcare and biopharmaceutical sectors are likely to benefit from supportive insurance policies and real-world data applications. Infrastructure investment, particularly in rural road construction, will continue to drive related industrial development. The consumer market's gradual recovery, as indicated by CPI data, presents opportunities especially in service consumption. Additionally, capital market reforms and the entry of long-term funds provide expanded investment opportunities for market participants.

In the automotive sector, Chinese brands are demonstrating remarkable progress in both technology and market performance. The new energy vehicle market shows particularly strong momentum, with multiple brands launching new models and achieving impressive pre-sales and delivery results. Harmony Smart Travel's new Zhijie R7 and S7 models garnered over 20,000 pre-orders in just 8 hours, while Wenjie M8 electric version opened for pre-orders. Geely's Galaxy A7 received over 10,000 pre-orders on its launch day, earning market recognition for its Leixin AI electric hybrid 2.0 system and Flyme Auto intelligent cockpit. BYD's achievement in reducing hybrid fuel consumption to a world-record 2.6L/100km demonstrates Chinese automakers' growing technological capabilities in powertrain efficiency.

The artificial intelligence field continues to see significant breakthroughs and application expansions. Huawei has made important technical breakthroughs in AI inference, potentially reducing dependence on HBM technology and improving the inference performance of domestic AI large models. Alibaba's Tongyi Qianwen released two small language models, Qwen3-4B-Instruct-2507 and Qwen3-4B-Thinking-2507, showing significant improvements in non-reasoning and reasoning capabilities, particularly suitable for edge hardware. Xiaohongshu released the multimodal AI large model dots.vlm1, achieving state-of-the-art performance in visual encoding and image-text understanding. Origin Quantum's development of the Quantum Edge Encoding Method represents a significant advancement in quantum computing's practical applications, particularly in pharmaceutical research.

In robotics and embodied intelligence, China is making rapid strides. Linkerbot's achievement as the only company globally to mass-produce high-DOF dexterous hands represents a significant milestone in embodied intelligence hardware. With 42 degrees of freedom, 10x durability compared to international competitors, and just 1/30 the cost, these advances position China at the forefront of this emerging field. Vita Power's launch of China's first intelligent companion robot Vbot with VLA capabilities further demonstrates China's growing capabilities in creating sophisticated robotic systems with practical applications. The World Robot Conference in Beijing showcased multiple humanoid robots and industrial robots, with companies like UBTECH and Fourier displaying their latest achievements in humanoid and intelligent companion robots.