My Top 10 US/China Technology and VC Trends for 2024

If you think back on 2024, how will you remember it?  

Not a typo, but inspired by Bill Gates’ beautifully written note on “The road ahead reaches a turning point in 2024”, I want to start the very first newsletter with my China/US predictions with the end in mind. This year will end with hope, after months of anticipation. 2025, not 2024 will mark a new era for China and the US. I believe 2024 will be a year of transition.

And here are the 10 trends I will watch out for:

1. 2024 Taiwan and US Presidential elections will Shape China/US Relations and Their Future of Technology From AI chipsets export control to data privacy regulation, CFIUS investment to IPO restrictions, many technology industry leaders and investors are going to hang tight without making structural moves until they know who is going to be the leaders of the free world. The decisions made by elected leaders will determine how much progress many industries can continue to make in each area. 

2. Splinternet will Continue for the AI World - The Chinese AI industry, following the trajectory of the "splinternet," is expected to develop distinct AI ecosystems, diverging from global standards. This trend involves tailored AI hardware and software technologies that align with China's specific regulatory, cultural, and political frameworks. As global AI governance becomes increasingly fragmented, Chinese AI advancements will likely mirror this division, leading to unique data handling norms and AI infrastructures. In the US, Microsoft/OpenAI and Google will lead the development of foundational models (LLMs). In China, the jury is still out who is going to lead. Baidu (Ernie), Alibaba (Damo), Tencent and Baichuan will likely be the winners. These are the only players with the financial and political muscle to secure enough Nvidia’s GPUs for training. (Alfred Chuang, General Partner at Race Capital).

3. No substantive AI Regulations in both China or US - End users in both worlds will get addicted to AI at such an astonishing rate that no regulation can kick in fast enough. A la TikTok.  After all the rhetoric in America, there is still no way to ban it. Microsoft/OpenAI, X and Google will try to lead the conversation for regulatory framework in the US, vs in China,  where the conversation will be driven by the Chinese government. 

4. Launch of AI App Stores in both China or US - In 2017, WeChat launched "Mini Programs" -  a mini program is an app within WeChat. Developers can create mini apps (utilities, games, etc)  in the WeChat ecosystem. WeChat users can install these apps inside their WeChat app. In 2024, I predict WeChat will launch a similar platform but for GenAI apps. X (formerly known as Twitter) will also follow suit.  Along with X, which is now licensed for payment processing in a dozen US states, Elon will launch a handful of financial AI apps on X and complete his vision for Grok and X.ai. 

5. Hong Kong and New York will be the Hubs for Digital Currency - In the US, a few more Bitcoin and Ethereum ETFs will be approved. These ETFs will pave the way for Wall Street and institutional participation and capital inflow into Crypto. In China, Hong Kong will be the gateway for all things digital currency. More crypto exchange licenses will be issued for international crypto exchanges like Coinbase. More meetups and gatherings in both Hong Kong and New York. 

6. Apple’s Vision Pro Will Bring New Wave for the Metaverse - Apple will release its high-end augmented reality headset, Vision Pro early 2024. It is reported that over 500,000 headsets have been sold so far.  Apple's entry into the AR/VR market could do wonders for the industry.  Can Apple do what the iPhone did for smartphones? If Apple succeeds in launching an accessible and appealing mass-market headset, it may finally catalyze consumer demand for immersive 3D virtual environments and lighting fast 5G connectivity which together promise to birth the “Metaverse”. Apple could entice developers in both US and China to build engaging new metaverse apps and use cases that extend far beyond gaming into areas like workplace collaboration, live events, travel experiences and more. The beginning of this new future starts in 2024.

7. More Sea Turtle Chinese Founders Will Migrate Oversea - Sea turtles—a popular term for Chinese returnees who studied or worked overseas much like how sea turtles return to beaches to lay eggs—are uniquely equipped to absorb external perspectives and tap cross-border relationships. A growing contingent of these Chinese entrepreneurs are packing up again in search of more fertile grounds for innovation free from overbearing data restrictions and US-China conflict. eCommerce (Shein and Temu) and EV (BYDa and Xpeng) are already making their mark in the world. Gaming giant Tencent, Kunlun and Kuaishou have already expanded operations across locations like Singapore and the Netherlands. Other industries including industrial manufacturing, health and biotech will fuel geographies like SE Asia and Africa. 

8. No More Cross Border Venture Capital Funding  No Chinese venture money for US startups nor US investors investing into Chinese startups.  Both markets will focus on domestic companies for now. Why bother with opposing CFIUS regulations, data barriers, export controls and other protectionist policies when there are plenty of domestic opportunities. In China, VCs are focusing on smart manufacturing, intelligent mobility systems and other industrial AI use-cases that substitute imported solutions.  In the US, VCs are focusing on enterprise AI and SaaS use cases including sales, customer services, hiring and more. 

9. IPOs in both China and US Will Slowly Rise - With tech pillars like Alibaba and Tencent still trading far below 2021 highs, market sentiment for Chinese stocks remains fragile. PDD (Temu) is the only exception which gives hope for Chinese eCommerce players and the upcoming Shein IPO.   The year will start with the Shein IPO at a $66 Billion valuation, but with the ongoing lawsuits with Temu, unfair labor treatment and tax challenges, the stock will trade at IPO price or slightly below. The US stock market should trend upward as the interest rate (hopefully) will be lowered in the middle of the year. I don’t expect the Fed will move fast on this one. In the US, several highly anticipated tech IPOs are still in the pipeline and could potentially rank highly if they occur before the end of 2024 including Stripe, Databricks, Discord, Reddit and Chime.

10. Limited Cross Border LP Money for Venture Capital Funds US limited partner (LP) investment into China-focused venture capital funds hit a rapid deceleration in 2023 amid ballooning geopolitical tensions and COVID-induced travel restrictions. This stall was a shift after years of surging American LP allocations into many Chinese funds. This trend will likely continue. Similar situation for US venture capital funds, it will be difficult for Chinese LPs to deploy due to currency control and mounting scrutiny from CFIUS.

This week a total of 0 startups raised $0M in funding, 1 M&A:

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