On December 29, China's billion-dollar private equity firm Jinglin Asset sent an &#34;end-of-year letter&#34; to investors.
According to Zhitang, Jinglin Asset's fund manager Gao Yuncheng stated in this letter, &#34;2026 is likely to be the year when AI Agents truly become mainstream.&#34;
Gao Yuncheng pointed out in this letter that AI large models, which use hardware such as smartphones as the underlying operating platform, may even challenge the existing iOS and Android systems. &#34;Many existing moats may be disrupted in this wave of technological change; companies without an AI ticket will be marginalized. This is something we need to be vigilant about!&#34;
Zhitang has summarized the key points of this letter as follows for readers.
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Core Points:
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The fact that 50% of AI researchers are of Chinese descent is actually an affirmation of China's basic education, indicating that China has competitive advantages and cost-effectiveness in the wave of generative artificial intelligence competition.
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Against this macro backdrop, we observe that international funds are flowing back into Chinese assets, and this process has just begun.
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As investors, we should not hastily draw conclusions about AI, but we need to continuously and seriously examine the cash flow status of the companies in our portfolio and adjust the valuation calculations after applying stricter accounting assumptions.
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The valuations of our core holding companies are all within historically reasonable ranges, and their business models possess pricing power, with competitive landscapes in favorable positions, and the management teams are sufficiently clear-headed and rational.
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Our core holdings are basically stable and not significantly different from the few businesses shared with everyone mid-year. In summary: two systems, each with its own stars.
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Only companies with excellent business models and particularly favorable competitive landscapes have the ability to control profit levels. Such companies are extremely rare.
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<h2>China's Competitiveness in Generative Artificial Intelligence</h2>
The emergence of DeepSeek in 2025 has made the world recognize that China has competitive advantages and cost-effectiveness in the wave of generative artificial intelligence competition.
Not only DeepSeek, but the global adoption of Qwen in open-source models also proves that even in the absence of the most advanced GPUs, domestic models can still leverage existing available resources to make leaders anxious and provide global alternatives outside of the United States.
The fact that 50% of AI researchers are of Chinese descent is an affirmation of China's basic education; the large number of STEM talents indeed supports the continuous upgrading from basic industries to aerospace and military technology.
The iterative development of generations of engineering talents behind China's industrial development fully illustrates our historical process of learning from advanced Western manufacturing to participating in complex global industrial chain divisions, and then achieving breakthroughs in research and development and manufacturing in certain industries.
With a strong talent reserve and already developed, globally competitive leading companies in the industrial chain, China has sufficient strength.
<h2>International Funds Returning to Chinese Assets</h2>
Against this macro backdrop, we observe that international funds are flowing back into Chinese assets, and this process has just begun.
In the forefront of new economic developments such as AI, new energy, intelligent driving, and humanoid robots, both China and the United States are actively investing, and related companies are rapidly growing in this wave, witnessing their revenues and market values continuously breaking records, with a promising future ahead.
<h2>Be Cautious of Overly Optimistic Expectations</h2>
However, alongside this rapid development, there are increasing voices of skepticism.
Discussions about whether future cash flows can support trillions of yuan in AI-related infrastructure investments have been ongoing since the end of 2025. The capital expenditures of large technology companies, both on and off the balance sheet, have become so large that many doubt this cyclical system will be sustainable at some point.
As investors, we should not jump to conclusions lightly. However, based on such risk warnings, it is necessary for us to continuously and carefully examine the cash flow situation of the companies in our portfolio and adjust the valuation calculations after applying stricter accounting assumptions.
Indeed, some companies' market values are built on overly optimistic expectations for the future, but these are not the companies in our portfolio.
The valuations of our core holdings are all within historically reasonable ranges, and their business models possess pricing power, competitive positions are favorable, and management is sufficiently clear-headed and rational.
<h2>Future Giants = Newly Established AI Native Companies</h2>
This year's regret is that we did not actively participate in the storage and information transmission segments of the AI industry chain. The reasons for missing out are that the former was overly focused on cyclical aspects, neglecting structural demand changes and the difficulties of new capacity, while the latter was due to concerns over excessively high profit margins and future technological shifts.
While being wary of bubbles or over-investment, we also clearly see that the penetration and transformation of AI across various industries has only just begun. The future giants may still be the newly established AI native companies. Once such tools that significantly enhance efficiency are utilized, they cannot be stopped.
The difference mainly lies in which AI tools to use and how much to spend. The research efficiency and cost-effectiveness demonstrated by China's leading companies once again prove themselves to the world.
Beyond the aforementioned fields, the global economy is also facing growth pressures, including employment pressures. How to maintain low unemployment rates in the era of artificial intelligence is a global challenge.
There is hope, there are problems, there is a vibrant gathering of resources, and there are also deep-seated issues that need to be gradually resolved—these complexities, combined with human greed and fear, manifest in the stock market as significant individual stock volatility—holding firm is not easy.
Many investors lament that if they had held onto the companies they owned at the beginning of the year until the end of the year, their returns would have far exceeded those from active trading. This is the difficulty of investing.
<h2>Two Systems, Each with Its Stars</h2>
Our core holdings are basically stable and not much different from the few businesses shared with everyone mid-year.
In summary, it can be said: two systems, each with its stars.
In the two major systems dominated by G2, we select companies with reassuring valuations and operating cash flows based on their respective comparative advantages.
The companies in our core holdings share a common characteristic: these companies have strong customer stickiness and pricing power, their products are clearly differentiated, and they can control acceptable profit margins at their own pace
In my previous letter, I mentioned that the vast majority of companies are in a frantic state of life-and-death competition in the market, without the composure to control their pace.
Only companies with excellent business models and particularly unique competitive landscapes have the ability to control their profit levels. Such companies are extremely rare, and we may hold onto them until they begin to lose this privilege. This is also an important characteristic of businesses that truly have a competitive moat.
In addition, companies that serve as important AI application gateways or platforms should be given significant attention.
<h2>2026 is likely to be the inaugural year of AI Agent's true popularization</h2>
There are only a few companies that can be considered world-class gateways or platforms, such as Google, Meta, Apple, ByteDance, Tencent, and OpenAI. 2026 is likely to be the inaugural year of AI Agent's true popularization.
AI Agents at the software level and AI Agent devices that combine software and hardware will continue to be launched. AI large models that use hardware like smartphones as their underlying operating platform may even challenge the existing iOS and Android systems. Many existing competitive moats may be disrupted in this wave of technological advancement, and companies without an AI ticket will be marginalized. This is something we need to be vigilant about!
<h2>Internal &#34;evolution&#34; of private equity funds</h2>
After more than 20 years of development, Jinglin can report to our investors: We have now initially established the capability for research and investment in some important overseas markets.
Based on our foundation of listed companies rooted in China, we have spent 7-8 years building teams and systems, gradually developing the ability to identify the best companies globally along the industry chain in certain sectors

GOOG

OpenAI

- On December 29, China's Jilin Asset issued an annual letter indicating that 2026 may mark the true onset of AI Agent proliferation.  
- The letter highlights China's competitiveness in generative AI, backed by a strong STEM talent pool and international capital returning to Chinese assets.  
- It emphasizes the need for cautious investment strategies, as companies' cash flow and valuation adjustments will be crucial amid rising uncertainties in AI-related investments.

Jinglin Asset Year-End Statement: 2026 Will Be Another Year of AI, International Funds Are Flowing Back to Chinese Assets