technology NASDAQ stock exchange went live for the first time on Monday, the price of shares in some of the 25 listed companies soared by an extraordinary 520 percent. Even by the standards of most equity launches around the world, the behavior of the gains of the "stags" — early investors who fully expect the price of the new stocks to rise — on the new Star Exchange in Shanghai were exceptional. They may be explained in part by the reality that the Chinese are inveterate gamblers. But there is far more to the new high technology market than a place for wild speculation. Indeed, the Star Exchange is anything but a gamble. It is in fact a strong statement of political intent by the government in Beijing. Less than a year ago, President Xi Jinping announced the market would be set up. It was already very clear to his administration that China was heading into troubled trading waters with the Trump White House. Even though foreign capital plays a negligible role in funding Chinese companies — being shut off from investment is one of Trump's many complaints — Xi foresaw his country's technology sector was likely to be part of the battleground. Washington's move to lock advanced communications company Huawei out of the new 5G networks worldwide has only been the most obvious element of the challenge facing the sector. Foreign earnings for a raft of businesses involved in the manufacture and development of Information and Communications Technologies (ICT) were always likely to fall. Some measure of the extent of the financial hit China could take is evidenced by the vast $350 billion imbalance in trade between Beijing and Washington. Yet a collapse in Sino-US trade will hardly prove fatal to Beijing. China has its own substantial domestic markets along with the opportunities to be reaped from two decades of geopolitical investments, not least in Africa. At the moment, even the mighty Huawei is reliant on US technology for key chip sets. But given the extent of innovation among Chinese technologists, coupled with what Trump claims, with apparent justice, the widespread plundering by state-sponsored Chinese hackers of technological secrets and intellectual property, it will not be long before US chips will be entirely unnecessary for further Beijing ICT advances. The opening of the Star Exchange is an earnest of this planned progress. Xi has been personally involved with the project since its outset. There is to be no lack of capital for local ICT firms. Moreover, it is likely that the Chinese will copy, to a certain extent at least, the Silicon Valley start-up model. As the Star Exchange expands its listing from the current handful of companies, any entrepreneur with a promising idea should find little difficulty in attracting funding. It remains to be seen however if China will follow the American example and encourage private venture capital partnerships who will seed promising new arrivals with funding, intending to sell out at a profit, as and when the business succeeds. There is very probably no sense of official embarrassment that the day after the Star opened so sensationally, almost all the 25 listed shares took a deep dive. In reality, there may actually be a quiet satisfaction that China has demonstrated its new high technology exchange on such a grand scale.
