Wall Street Banks Finance Both Sides Of America’s AI Race With China
Wall Street’s biggest banks were helping finance America’s artificial intelligence boom while simultaneously raising billions of dollars for Chinese companies competing to build Beijing’s domestic AI and semiconductor industries.
Jack McGeever·Sep 24, 2026·4 min read
🌐Foreign Affairs
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Wall Street’s biggest banks were helping finance America’s artificial intelligence boom while simultaneously raising billions of dollars for Chinese companies competing to build Beijing’s domestic AI and semiconductor industries.
Goldman Sachs, Morgan Stanley, Citigroup and JPMorgan have participated in major Chinese AI, semiconductor and technology offerings in 2026 as Washington sought to restrict China’s access to sensitive American technology and investment. Wall Street banks acted as bookrunners on 19 Chinese high-tech equity deals worth $17.2 billion this year, accounting for nearly 30% of the sector’s total issuance, according to LSEG data reported by Reuters.
Goldman Sachs, Morgan Stanley and Citigroup were among the joint global coordinators for Chinese optical component manufacturer Zhongji Innolight’s roughly $6.8 billion Hong Kong share offering this summer.
The deal came after the Department of Defense added Zhongji to its list of Chinese military companies in June. Zhongji, which makes optical transceivers used to move data inside AI data centers, generated 61.7% of its first-quarter revenue from the United States and said the Pentagon designation had not affected its orders or operations.
Morgan Stanley and Goldman also worked on Hong Kong offerings for Chinese AI developer MiniMax and semiconductor companies Montage Technology and Shanghai Iluvatar CoreX Semiconductor, according to Reuters.
JPMorgan played a direct role in another Chinese AI supply-chain financing. J.P. Morgan Securities (Far East) Limited identified itself as a
in an April filing with the Hong Kong Stock Exchange.
Victory Giant manufactures printed circuit boards used in AI servers and raised roughly $2.6 billion through the Hong Kong share sale, according to Reuters.
U.S. technology companies increasingly turned to bond markets, banks and private lenders to finance the data centers, power infrastructure and computing equipment required for AI. Goldman Sachs estimated that nearly $500 billion of AI-related debt had been issued in 2026 as of August.
JPMorgan estimated the five largest U.S. hyperscalers will spend roughly $697 billion on capital expenditures in 2026 as companies race to add computing capacity.
The financial connections between the two countries have persisted even as Washington increasingly treats Chinese advances in AI and semiconductors as a national-security issue.
The Treasury Department’s Outbound Investment Security Program targets certain U.S. investments involving China, Hong Kong and Macau in semiconductors and microelectronics, quantum information technologies and artificial intelligence. The rules prohibit some transactions and require Americans to notify Treasury about others.
The regulations do not, however, prohibit all Wall Street activity involving Chinese companies in those industries.
Treasury guidance states that an American investment bank providing underwriting services for an initial public offering by a covered Chinese company generally is not conducting a covered transaction unless the bank itself acquires a covered equity interest through the underwriting.
Treasury also exempts qualifying investments in publicly traded securities. The department clarified in December 2025 that securities acquired by a U.S. financial institution while underwriting certain follow-on offerings can fall under the publicly traded securities exception.
Wall Street’s work with strategically important Chinese companies previously attracted scrutiny from lawmakers.
The Pentagon had placed CATL on its list of Chinese military companies, a designation the company disputed. Republican Michigan Rep. John Moolenaar, chairman of the House China committee, urged American financial institutions to withdraw from the offering over national-security concerns.
Capital is also moving in the opposite direction.
U.S. stocks account for nearly half of the roughly 1 trillion yuan, or $150 billion, managed by Chinese outbound mutual funds, while Chinese investors increased their holdings in American semiconductor companies including Micron Technology, AMD, Sandisk, Lam Research and Applied Materials, according to Reuters.
The value of U.S. AI funding rounds involving investors based in mainland China or Hong Kong increased from roughly $436 million in 2023 to about $8.9 billion through mid-September 2026, according to S&P Global Market Intelligence data cited by Reuters.
President Donald Trump and Chinese leader Xi Jinping were set to partake in a state dinner at the White House Thursday.
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