The G2 Tech Rivalry: Who Leads the Charge in “China Tech”?
Since May, eight exchange-traded funds (ETFs) focused on Chinese technology companies have debuted on Korea’s stock market. Considering the listing review process, their planning phase likely dates back to the beginning of the year—when the Chinese AI developer DeepSeek was shaking global markets. In January, DeepSeek unveiled its reasoning model R1, which delivered performance not far behind OpenAI’s ChatGPT, sending shockwaves through the U.S.-led AI industry. Development costs were reportedly less than one-tenth of those incurred by major U.S. large language model (LLM) developers. From an ETF product design perspective, it was a catalyst too significant to ignore.
Backed by a domestic market of 1.4 billion people, the rise of “China Tech” has been formidable. In advanced fields such as artificial intelligence, autonomous driving, and humanoid robots, Chinese companies are beginning to challenge U.S. technological dominance. Alibaba’s AI model Qwen is being integrated into Apple’s iPhones. Huawei has developed AI semiconductors and supplies them to DeepSeek. Humanoid robots, meanwhile, are receiving concentrated support from the Chinese government. Since 2020, China has reportedly ranked first globally in the number of humanoid robot–related patent applications. Despite Washington’s efforts—dating back to the first Trump administration—to restrict China’s access to advanced technologies, these measures have ultimately failed to inflict decisive damage.
Recently launched China tech ETFs are characterized by their concentrated exposure to specific themes or industries—a marked departure from earlier products that tracked broad benchmarks such as the Hang Seng Tech Index or the H-Share Index. By category, KODEX China Tech TOP10, TIGER China Tech TOP10, and PLUS China AI Tech TOP10 focus on ten large-cap technology stocks. Core holdings typically include Xiaomi, Tencent, Alibaba, and BYD. Differences emerge in the details: KODEX includes the video platform Kuaishou Technology, while TIGER allocates to battery giant CATL, AI semiconductor maker Cambricon Technologies, and telecom equipment manufacturer ZTE.
Two ETFs focus on the humanoid robot theme: TIGER China Humanoid Robot and KODEX China Humanoid Robot. A representative holding is UBTech Robotics. Of the 20 stocks in each portfolio, nine overlap, but many are not well-known large caps. How these differences translate into performance will require time to assess.
Listed on the 17th, TIGER China AI Software invests exclusively in software and service companies, as its name suggests. Launched the same day, TIGER China Global Leaders TOP3+ invests in ten leading Chinese export-oriented technology firms, with particularly heavy weightings in Alibaba, Xiaomi, and BYD. TIMEFOLIO China AI Tech Active stands out as the only actively managed ETF in the group.
Although all of these products target China tech, their constituent stocks and weightings vary considerably. Rather than choosing based solely on brand recognition or market capitalization, investors may benefit from closely examining portfolio composition and monitoring performance over time—especially for ETFs with significant exposure to lesser-known mid- and small-cap names.
China’s domestic economy has yet to fully recover. Property prices remain on a downward trend, while youth unemployment and deflationary pressures continue to challenge policymakers. Still, in equity markets, stocks that are poised to rise often do so regardless of the broader backdrop. Advanced technologies—AI, autonomous driving, and humanoid robotics—appear to be emerging from the end of a long tunnel. For investors considering exposure to China, selecting ETFs focused on cutting-edge technology companies, rather than broad indices such as the CSI 300 or the H-Share Index, could make a meaningful difference in performance.