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Chinese markets lose trillions as race for AI supremacy with US takes its toll
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- DeepHorus
Trillions of dollars have been wiped from China's stock markets amid anxiety over AI and the race with the US. The STAR 50 Index has plunged 40% since June, and $2.4tn has been erased since May, according to Bloomberg. Other major indexes dropped about 20% over the same period. The drop signals that government efforts to boost tech have not sustained market growth.
AI stocks account for over 40% of market value in China and Hong Kong, per Goldman Sachs. The government has invested heavily, including a 60bn yuan AI fund this month. But weak consumer demand leaves many tech companies struggling to profit.
The lack of profits and fears of Western tech bans drive the sell-off. The US has banned humanoid robots and may restrict Chinese data centre components. China's export reliance makes such restrictions painful.
Dan Wang of Eurasia Group said: 'This year, the profit margin is not as good as expected. And the US is raising rates. And China's domestic demand is so weak.' She cited 'general anxiety' among tech firms. The sell-off reflects doubts about the state-backed AI model.
Beijing has doubled down on robotics to address demographic problems. But demand comes from government and research, not consumers, as products are too expensive for home use. Unitree's shares have halved since August.
Despite gloom, optimism persists in AI research and satellites. Globally, the AI boom is expected to last another year. US firm Anthropic filed for an IPO that could raise $100bn, while China has no such blockbuster IPOs on the horizon.
