Lack of profits and the threat posed by western countries are raising concern about the sustainability of Beijing’s AI boom

Lack of profits and the threat posed by western countries are raising concern about the sustainability of Beijing’s AI boom

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, according to Bloomberg.

AI stocks account for over 40% of the stock market value in China and Hong Kong, according to Goldman Sachs, meaning that any dent in value will send shockwaves across the whole domestic market.

  • codydodd@lemmy.caEnglish
    76·
    5 days ago

    The issue is the promised profits (edit or lets say productivity to avoid capitalist terms) simply never materialized and its a heavy burden on an over leveraged nation like china. US can buoy massive losses by pumping USD but that can only last so long too. AI is here to stay but the costs to run it, and the value you get out of it, are deeply imbalanced right now and portfolios are starting to show it. Name a VC who thinks AI is hot, none. Anyone with data centre stocks likely feeling some red lately. Its been estimated AI needs to generate 6 trillion in the next few years to cover data centre losses alone https://futurism.com/future-society/data-centers-trillion-capital-time-bomb-bain meanwhile revenues are trending downward. This is very similar to the Dot Com bubble.

    Edit: public utilities still have costs of operation even if not pursuing profit. More expensive operations still drag down an econony which is why if you build a state owned power plant you should aim for efficient ones not inefficient ones. These data centres are exacting mass cost on the chinese economy which is energy insecure. These pressures cant simply be ignored by saying oh its okay its a public utility. If we had infinite energy and resources sure. But no one does.