Chinese stock markets have shed roughly $2.4 trillion since May, according to Bloomberg data, as investors grow anxious about whether China's AI and robotics boom can generate profits to match Beijing's enormous state investment in the sector.
The STAR 50 Index, which tracks technology and innovation companies on the Shanghai exchange, has fallen 40% since June, while broader indexes of major Chinese companies are down roughly 20% over the same period. AI-related stocks account for more than 40% of total market value across China and Hong Kong, according to Goldman Sachs, meaning the sector's stumble is dragging down the wider market.
A state-backed boom without consumer demand
Beijing has invested heavily in AI, including a 60 billion yuan state-backed investment fund that began deploying capital to domestic developers this month, and has pushed robotics — often described as "embodied AI" — as a way to address an aging population and shrinking workforce. But as the Guardian reported, demand for humanoid robots and robotic dogs has so far come mostly from government agencies and research institutions rather than households, for whom the products remain too expensive and impractical.
Shares in Unitree, China's leading robot-maker, have halved since the company began trading in August. "This year, the profit margin is not as good as expected. And the US is raising rates. And China's domestic demand is so weak," said Dan Wang, China director for the Eurasia Group, describing a "general anxiety" among technology firms about whether the state-backed model can work without stronger consumer spending.
US restrictions add to the pressure
The selloff has coincided with tightening US restrictions on Chinese technology, including a ban on humanoid robots from China on national security grounds and reported consideration of limits on Chinese components in data centers. Because China relies heavily on exports, officials worry such restrictions will compound the difficulty domestic firms already face selling into a sluggish home market.
Wang said optimism persists in some adjacent sectors, including satellite technology, where military ties suggest long-term state backing regardless of near-term profitability. Globally, the AI investment boom is expected to continue for at least another year, a dynamic underscored this week by Anthropic's filing for what could be the largest stock market listing in history.