Xi's Warning on AI and EVs; SPACs Resurge in 2025

In recent developments, two significant events have emerged in the investment landscape: Chinese President Xi Jinping’s cautionary stance on over-investment in artificial intelligence (AI) and electric vehicles (EVs), and the resurgence of Special Purpose Acquisition Companies (SPACs) in 2025.

Xi Jinping’s Warning on Over-Investment in AI and EVs

During the Central Urban Work Conference, a high-level Communist Party meeting, President Xi Jinping expressed concerns over the rampant investments in AI and EV sectors across various provinces. He questioned the necessity for every region to develop these industries, highlighting the risks of redundant investments leading to deflation and resource wastage. This shift marks a departure from previous denials of overcapacity, emphasizing economic sustainability and debt management over mere GDP growth. Economists link these concerns to China’s ongoing deflationary pressures, with industrial sectors like solar glass, cement, and steel already reducing output. Analysts suggest future government intervention to curb excesses, particularly targeting smaller cities over major tech centers such as Beijing and Shenzhen. Source

Resurgence of SPAC Activity in 2025

The investment landscape has also witnessed a notable resurgence in SPAC activity. As of mid-2025, 74 deSPAC transactions have raised $14.7 billion, indicating a more experienced and possibly stable wave compared to the 2021 boom. However, SPACs now represent a smaller share (38%) of IPOs compared to 2021 (64%). This resurgence reflects a maturing market where investors are more discerning, focusing on SPACs with solid fundamentals and clear business strategies. Source

Implications for Investors

Global Investment Strategies

Xi’s remarks serve as a cautionary tale for global investors about the perils of over-investment in trending sectors without adequate oversight. It underscores the importance of due diligence and the need to assess the sustainability of investments, especially in rapidly evolving industries like AI and EVs.

SPACs: A Cautious Optimism

The resurgence of SPACs suggests a renewed interest in alternative investment vehicles. However, the reduced share of SPACs in IPOs indicates a more cautious approach by investors, favoring quality over quantity. This trend may lead to more robust and successful deSPAC transactions in the future.

Conclusion

The recent developments in China’s investment policies and the SPAC market’s resurgence highlight the dynamic nature of the global investment landscape. Investors are reminded of the importance of strategic planning, thorough research, and adaptability in navigating these evolving markets.