"[Beijing] very clearly said: 'Our national growth will be driven by technology,'" Harburg told Business Insider. "So it is unequivocal now they will lean in on technology, they will be supportive of technology, will do everything in their power to stimulate, subsidize, de-regulate — whatever is necessary to help technology kind of win."

That's an alluring notion for stocks beaten down by an anti-tech narrative in recent years. As of late February, Chinese equities were trading at around a 50% discount compared to the US market.

But the perceptions of China's negative view of the space might have been exagerrated, Harburg noted.

"I don't think the Chinese government was ever an anti-tech as we were led to believe," he said, adding: "The world perceives it very differently, because [regulation] happens without any warning, and it and it kind of like just shocks people and throws them off."

The crackdown narrative has given Chinese equities room to run higher this year, as it's helped lower valuations which are now moving upward. But it also helped catch US investors by surprise.

Starting with China's DeepSeek tool , a flurry of competitive Chinese AI tools have debuted this year, upending confidence in America's leadership in the space and sparking a reevaluation of Beijing's market, Harburg said.

As the AI trade has waned in the US this year, China's AI-linked stocks have soared on the back of the latest announcements.

"Clearly, China is much further along than we were told," Harburg said.

An economic turnaround?

There are still challenges though, and, so far, Beijing's focus on tech is only a sentiment shift, said Tianlei Huang, a researcher for the Peterson Institute for International Economics.

While positive signals were given, this remains a symbolic gesture without new policies. China's private sector—including tech— continues to face the same challenges that have pushed investors away since COVID, while confidence among entrepreneurs and consumers is at post-pandemic lows

"The reaction in the stock market to this [tech] symposium is, I think, actually a very sad thing," he said. "Nothing in substance has really changed in terms of policy, regulations, right? It's just an attitude change."

Many of the broader issues that have plagued China's economy are still in play. That includes a highly indebted real-estate sector and downbeat consumers, creating a deflationary environment from which investors have fled since 2023.

But Beijing might finally be waking up to this as well.

Over the past year, many of its stimulus measures have fallen short as they failed to target domestic consumers , which analysts agree are the linchpin to growth. Yet, during the two sessions, there was a new-found emphasis on domestic demand and private consumption.

By Friday, stocks rose as the government urged financial lenders to ease loan terms for consumer borrowers.

The shift toward domestic growth comes as China realizes it cannot reach this year's 5% GDP target by depending on trade, Huang said.

This was the case last year, as net exports accounted for 30% of GDP. It's not a sustainable number, and it's largely driven by product stockpiling from buyers worried about Washington's trade war.

It remains to be seen whether the 5% target is realistic, Huang said, though the sentiment shift is significant and should shape future policy.

But Harburg sees things in a much brighter light. Aside from the positive mood in tech, he noted that investor fears about China haven not been realized. There's been no major real-estate crash and improvements are beginning to show in first-tier cities.

"It doesn't happen for two years, three years, four years. And so the reality is, I think people are finally kind of fatigued with all of these stories that they were told," he said.

Read the original article on Business Insider