THE CRUNCH
Trillions of dollars have been wiped from China's stock markets in recent months as anxiety grows over the sustainability of the country's AI boom. The STAR 50 index, which tracks technology and innovation companies in Shanghai, has fallen 40% since June, with other major indexes down about 20% over the same period. In total, roughly $2.4tn has been erased from the Chinese market since May, according to Bloomberg figures cited by the Guardian.
The sell-off matters well beyond tech portfolios. AI stocks account for more than 40% of total stock market value in China and Hong Kong, according to Goldman Sachs, so a dent in that sector sends shockwaves across the whole domestic market.
Analysts point to a tangle of causes. Many Chinese tech companies struggle to turn a profit because consumers have been reluctant to spend, while the US is extending restrictions on Chinese technology, including a ban on Chinese humanoid robots and a possible ban on Chinese components in data centres. "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," said Dan Wang, China director at the Eurasia Group, who described a "general anxiety" about whether the state-backed model can work.
Beijing has doubled down on robotics, or embodied AI, seeing it as a way to spread AI across society and offset an ageing population and shrinking workforce. But demand so far comes mainly from government agencies and research institutions rather than households, and shares in Unitree, China's leading robot-maker, have halved since listing in August. "It doesn't look like embodied intelligence could turn into profits in the mass market," Wang said.