Trillion-dollar loss in Chinese stock markets due to artificial intelligence competition

China's technological competition with the US in the field of artificial intelligence has brought about sharp declines in the country's stock indices. According to Bloomberg data, $2.4 trillion has been wiped out from Chinese stock markets since May, while the tech-focused STAR 50 index has lost 40 percent of its value since June.

According to Goldman Sachs data, artificial intelligence stocks account for more than 40 percent of the total market value in Chinese and Hong Kong stock markets. This concentration causes any loss of value in the sector to trigger widespread shocks across the domestic market. Despite the 60 billion yuan state-backed artificial intelligence investment fund launched by the government this month to support the technology sector, the downward trend in the markets could not be halted.

Among the main reasons for the selling pressure in the markets, difficulties faced by technology companies in profitability and consumers' reluctance in technology spending stand out. In addition, the threat of Western countries, especially the US, expanding restrictions on Chinese technologies is considered another critical factor damaging investor confidence.