CHINA’s STAR50 technology index lost a brutal $480 billion (or 40%) in market value over a span of four months.
According to the experts, the artificial intelligence (AI)-led crash was caused by speculation of overvalued stocks, which drove up prices on the assumption that their earning would meet expectations.
Additional pressure came from United States tech restrictions on Chinese tech exports, rising tax burdens and ‘involution’ among domestic chip makers.
Despite the bruising they’ve endured, China will not abandon artificial intelligence any more than the US would if or when it experiences its own AI market correction. The Chinese Communist Party does not really care about traders or investors, or markets for that matter. As a government that focuses on industrial policy, they see AI through the lens of military and industrial power, which is to say they are prepared to lose income as long as they stay in the game.
In short, China sees AI as a means to attain power, not wealth or even the well-being of the Chinese.
The same can be said of the US. They see it as existential, just like the Soviets did with nuclear power and the space race.
This is about strategy and technological hegemony, not profit. Cash flow are acceptable casualties in the game of hegemony, and this is even more true for China than the US.
So don’t expect China (or the US) to wind down their AI investment. Rather, expect them to double down, because at the end of the day, AI is a zero sum, winner-take-all game.
Will they continue to funnel money into tech? Certainly.
Will there be another crash? Probably.
The competition over AI will only end once there is a winner and the loser is forced to retreat./PN
