Chinese markets lose trillions as AI race with US strains profitability

Trillions of dollars have been wiped from Chinese stock markets amid growing anxiety over the sustainability of Beijing's AI boom, as the country races the US for dominance in the sector. The STAR 50 Index has plunged 40% since June, erasing $2.4tn from the market since May, driven by weak profits, US threats of further bans, and sluggish domestic demand. AI stocks account for over 40% of market value in China and Hong Kong. Despite heavy state investment, including a 60bn yuan AI fund, consumer reluctance and thin margins undermine profitability. Robotics demand comes mainly from government agencies, not households, and no major IPOs are expected as officials avoid risky stimulus before the Party Congress.