Artificial intelligence competition between China and the United States has intensified, but China's domestic market scale alone provides a powerful foundation for its AI sector to succeed, according to Christopher Hamilton, Head of Client Investment Solutions for Asia Pacific (ex-Japan) at Invesco.

Hamilton argues that Chinese AI models do not need to penetrate the US market to achieve success, as China's vast economic size gives it the capability to adopt and scale AI technology faster than virtually any other nation on Earth. This combination of market depth and rapid implementation speed constitutes a compelling reason to be bullish on Chinese AI assets.

While the United States will always remain a central hub for global technology development, China's overall pace of technological advancement is quicker. Hamilton believes there is room for both AI ecosystems to flourish simultaneously, and a discerning user will employ different large language models for different tasks depending on their specific strengths.

"If China can break into the realm of 0-to-1 innovation, which is currently almost exclusively dominated by the US, and begin setting global standards with breakthrough technologies, then we will see Chinese AI models exert their influence on the worldwide market," Hamilton stated.

The market has historically underestimated the impact of Chinese policy on industry development, causing investors to miss out on some excellent opportunities, Hamilton noted. Current policy is highly focused on specific areas, including AI technology and industrial export-oriented sectors, and these represent the future direction for asset allocation.

Invesco currently holds an "overweight" position on the technology sector, including AI. Hamilton advises investors not to think of technology solely in terms of the "Magnificent Seven" but rather to view it as a broader landscape that encompasses sectors such as communication services, utilities, and consumer staples. These are among the core industries where the firm maintains its "overweight" stance.