China’s economy, tech, and markets are having a great month already

China is opening the month with strength across trade, chips, and money markets.

Chinese companies tied to cross-border transactions saw their stocks surge after the commerce ministry said the yuan is being used to pay tolls for passage through the Strait of Hormuz. That news sent traders straight into names linked to moving money across borders.

In Shenzhen, CNPC Capital, the financial services arm of China National Petroleum, jumped as much as the 10% daily limit. Lakala Payment climbed as much as 7.9%. Shenzhen Forms Syntron Information rose 9.4% before giving back part of the gain later.

Cross-border payments surge as yuan toll use lifts market bets

China has been pushing wider yuan use in trade for years, and this update gave the market something specific to trade on. That is why CNPC Capital, Lakala Payment, and Shenzhen Forms Syntron Information all shot higher in the same session.

The second major piece of the story came from SMIC, China’s biggest chipmaker, which reported 2025 revenue increase of 16% from a year ago to a record $9.3 billion.

Analyst estimates from LSEG say revenue could top $11 billion in 2026.

Moore Threads, which wants to compete with Nvidia, said 2025 revenue should come in between 1.45 billion yuan and 1.52 billion yuan, or about $209.8 million, which would mean growth of 231% to 247% from a year earlier.

New U.S. restrictions on Nvidia’s chips to China have also pushed Beijing to encourage local firms to buy homegrown alternatives. Huawei has been one of the companies stepping in. The gap is still there, though. Chinese chips still trail U.S. products on performance.

Chip sales jump while the central bank pulls cash from the system

Even with record revenue, China’s chipmakers are still behind rivals in the U.S., South Korea, Europe, and Taiwan when it comes to advanced technology.

U.S. export restrictions kept pushing Beijing to support local technology harder. Analysts and the companies themselves are now looking for another leg up this year as Chinese tech giants keep spending on AI infrastructure at home.

SMIC and Hua Hong still cannot produce the world’s most advanced chips at scale like Taiwan Semiconductor Manufacturing Co. (TSMC).

A big reason is that they cannot get the most advanced tools made by ASML in the Netherlands because of export restrictions. China is trying to build domestic alternatives, but that job is difficult because the technology is highly complex.

At the same time, China’s central bank (People’s Bank of China) withdrew cash from the financial system for the first time in a year, draining 890 billion yuan, or about $129 billion, through short-term open market operations.

The central bank also absorbed another 250 billion yuan through longer-term tools, including outright reverse repurchase agreements and the medium-term lending facility.

Now growth has picked up at the start of the year, and the war in Iran has pushed oil prices higher. That has made the PBOC more cautious as China gets closer to moving out of its record deflation stretch.

More detail on the withdrawal should come in mid-April, when the bank releases balance sheet data.One key measure is claims on other depository corporations, which tracks lending to commercial banks.

That figure had risen for nine straight months through February. It also includes structural policy tools that support lending to targeted sectors, and those usually change less month to month.

To offset some of the drain, the PBOC resumed government bond purchases in October, but those purchases have been no larger than 100 billion yuan a month.

After counting all liquidity tools, the central bank made a net drain of more than 810 billion yuan in March, based on an official statement published on Thursday.

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