News / Media September 25, 2026

Inside the U.S.-China AI Race, From BABA New Chip to Regulation Efforts

"We estimate AI and cloud services are now about 18% of overall revenue for our KWEB portfolio companies, up from less than 10% just one quarter ago," KraneShares Senior Investment Strategist Henry Greene told Sam Vadas on Schwab Network.

Henry discussed the latest developments in China's AI sector, including Alibaba's new chip, the updated Qwen model, and Chinese data center expansion plans through 2032.

Henry argued that Chinese AI models are gaining real commercial adoption, with U.S. companies, including Airbnb, turning to cheaper Chinese alternatives like Alibaba's Qwen, and that this shift in the market could potentially benefit the profitability of companies held in KWEB.

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This material contains the speakers' opinions. It is provided for informational purposes only and should not be regarded as investment advice or a recommendation of specific securities.

For KWEB standard performance, top 10 holdings, risks, and other fund information, please click here.

KraneShares CSI China Internet ETF

Key Catalysts that may poise the China internet sector for strong performance:

China's AI industry is positioned for continued growth. The country aims to expand its core AI industry to over $140 billion by 2030 and boost related sectors to $1.4 trillion across the same period.^*

China has a large middle class population of over 500 million people,^** which represents a sizable market opportunity for the companies held in KWEB. China's internet population reached 1.13 billion people in 2025. With a penetration rate of only 80% (compared to 93% in the US), there is significant potential for user growth.^†

Online shopping accounted for 26% of retail purchases and retail web sales totaled $2.2 trillion in China in 2025 (compared to $1.3 trillion in the United States).^**

Data generated from E-Commerce and internet services provides the companies held in KWEB with the proprietary, high-volume datasets necessary to train increasingly complex AI models, which further bolsters Chinese AI development. China's annual data volume grew at a compound annual growth rate (CAGR) of 26% from 2022 to 2026, ranking first in the world.^*

* World Economic Forum, "Blueprint to Action: China’s Path to AI-Powered Industry Transformation", January 2025. Compound Annual Growth Rate (CAGR): Mean annual growth rate of an investment over a period longer than one year.
** Data from National Bureau of Statistics of China and the United States Census Bureau as of 12/31/2025.
^† Data from ITU and the China Internet Network Information Center (CNNIC) as of 12/31/2025.

Inside the U.S.-China AI Race, From BABA New Chip to Regulation Efforts

China, Emerging Markets & Regional ETFs

KWEB

KraneShares CSI China Internet ETF

Key Catalysts that may poise the China internet sector for strong performance: