In recent months, China’s stock markets have lost trillions of dollars amid growing concern about the future of artificial intelligence, as Beijing competes with the United States for dominance in the sector.
This is reported by The Guardian.
The STAR 50 index, which tracks the performance of technology and innovation companies on the Shanghai Stock Exchange, has fallen 40% since June. Other indices covering large companies have dropped by around 20% over the same period.
According to Bloomberg, this sharp decline has wiped $2.4 trillion off China’s stock market since May.
Goldman Sachs says shares in companies linked to artificial intelligence account for more than 40% of the value of the stock markets in China and Hong Kong. This means any devaluation in the sector would send shockwaves across the entire domestic market.
The downturn suggests that, despite the government’s efforts to develop China’s technology sector—especially industries that harness the potential of artificial intelligence—the domestic economy does not have sufficient capacity to sustain the market’s rapid growth.
The Chinese government has made large-scale investments in AI; in particular, it has set up a state investment fund with capital of 60bn yuan, which began financing domestic developers earlier this month.
However, Chinese consumers have shown a persistent reluctance to spend across many parts of the economy, including the technology sector, leaving many tech companies struggling to turn a profit.
A lack of profits is one of several reasons behind the mass sell-off in shares. Another is the threat that Western countries—above all the US—could expand restrictions on Chinese technology.
The US has banned the import of humanoid robots from China, citing national security risks. It is also reportedly considering banning the use of Chinese components in data centres. China is heavily dependent on exports, so US restrictions are harming its domestic companies, which are already finding it difficult to sell sufficient volumes on the home market.