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Chinese markets lose trillions as race for AI supremacy with US takes its toll

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, acc…

By the Truvace desk2 min read1 sourceEvidence: Emerging · 42/100 — News report · 1 independent sourceJournalismTRV-2026-2276· cite & verify
Chinese markets lose trillions as race for AI supremacy with US takes its toll

In brief

Chinese stock markets have lost an estimated $2.4tn since May, as the technology-focused STAR 50 Index fell 40% from June and other major indexes dropped about 20%. The article ties the sell-off to anxiety over AI, thin profit margins, weak consumer demand and the threat of wider Western bans on Chinese technology.

The episode matters because Goldman Sachs says AI stocks make up over 40% of market value in China and Hong Kong, so weakness in the sector spreads across the domestic market. It remains uncertain whether state-backed investment can make up for weak demand, and the article reports that no stimulus is expected during a politically sensitive period.

Main points

  1. AI stocks account for over 40% of stock market value in China and Hong Kong, according to Goldman Sachs.
  2. A 60bn yuan state-backed AI investment fund began investing in domestic developers this month.
  3. Shares in robot-maker Unitree have halved since they began trading in August.
  4. The US has banned humanoid robots from China on national security grounds and is thought to be considering a ban on Chinese components in data centres.
  5. Anthropic filed paperwork for a planned IPO that could raise as much as $100bn, while China has no comparable listings on the horizon.

The problem

China's AI-heavy equity market has lost $2.4tn since May, with tech indexes falling 20% to 40%, because AI and robotics firms struggle with thin profits, weak domestic demand and US restrictions.

The rundown

Analysts quoted in the piece point to several causes of the sell-off: profit margins below expectations, rising US interest rates, weak domestic demand and fears that Western countries will extend bans on Chinese technology. Eurasia Group's Dan Wang described a general anxiety over whether the state-backed model can work.

Beijing has bet on robotics, or embodied AI, as the way to roll out the technology and to address demographic challenges such as an ageing population and a shrinking workforce. But demand comes mainly from government agencies and research institutions, while consumers find the products too expensive and impractical for the home.

Efforts to steer investors toward domestic markets by restricting overseas investment have not increased investment in Chinese markets. Wang said optimism persists in AI research and satellites, and the global AI boom is expected to last at least another year.

Sources

  1. JournalismThe Guardian2026-10-27

The debate