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Chinese markets lose trillions as race for AI supremacy with US takes its toll (www.theguardian.com)
submitted 1 hour ago by MicroWave@lemmy.world to c/world@lemmy.world
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Lack of profits and the threat posed by western countries are raising concern about the sustainability of Beijing’s AI boom

Trillions of dollars have been wiped from China’s stock markets in recent months amid increasing anxiety about the future of artificial intelligence, as Beijing races against the United States for dominance in the sector.

The STAR 50 Index, which tracks technology and innovation companies on the Shanghai stock exchange, has plunged 40% since June. Other indexes of major companies dropped by about 20% over the same time period.

The precipitous drop has wiped out $2.4tn from the Chinese stock market since May, according to Bloomberg.

AI stocks account for over 40% of the stock market value in China and Hong Kong, according to Goldman Sachs, meaning that any dent in value will send shockwaves across the whole domestic market.

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[-] Cowbee@lemmy.ml 11 points 1 hour ago* (last edited 51 minutes ago)

China treats AI more as infrastructure than something to directly profit off of, which is why this is a bit of a strange article. Their models are open weight generally, you aren't legally allowed to replace a job with AI, and their models are optimized to be low-cost and efficient compared to western models. This isn't a recipe for profit, but for public utility. It's expected that The Guardian would frame their strategy from the viewpoint of capitalists seeking to maximize profits, though. It's the same as when the CPC deliberately sank the cost of housing, which was being used as an investment vehicle, and capitalists complained about the market rather than highlighting the new affordability of housing.

[-] codydodd@lemmy.ca 2 points 38 minutes ago* (last edited 31 minutes ago)

The idea of AI as a public utility is pretty cool. But I admit you are an early advocate for this and encourage you to keep pushing it. Edit: my take is highlighting how economically unsustainable the models are under hyper surveillance capitalism, which compliments your take i think.

[-] Cowbee@lemmy.ml 4 points 33 minutes ago

Again, this fundamentally confuses how AI is treated in China and equates it to the US. Profit is secondary to utility in China, at least when it comes to infrastructure and critical industries. That's why the biggest companies in China are all state owned enterprises. AI in China is being used for pattern recognition in manufacturing and agricultural work, to help identify patterns for medical diagnosis, etc. It isn't being used to replace workers. The costs to run, say, Deepseek or Qwen are far below Claude and ChatGPT, so projecting western handling of AI onto China doesn't make much sense to me.

[-] BeMoreCareful@lemmy.world 1 points 19 minutes ago

Is this just due to the stockpiling of chips and data centers?

I guess it makes sense coming from a country that built empty cities, but are they speculating the was the west is?

Like where were they hoping to make money?

[-] codydodd@lemmy.ca 1 points 33 minutes ago

The issue is the promised profits simply never materialized and its a heavy burden on an over leveraged nation like china. US can buoy massive losses by pumping USD but that can only last so long too. AI is here to stay but the costs to run it, and the value you get out of it, are deeply imbalanced right now and portfolios are starting to show it. Name a VC who thinks AI is hot, none. Anyone with data centre stocks likely feeling some red lately. Its been estimated AI needs to generate 6 trillion in the next few years to cover data centre losses alone https://futurism.com/future-society/data-centers-trillion-capital-time-bomb-bain meanwhile revenues are trending downward. This is very similar to the Dot Com bubble.

this post was submitted on 27 Oct 2026
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