The US$2.4 trillion plunge in market value since May sits between Korea’s $2.25 trillionGDP and Canada’s $2.49 trillion. Many factors could explain Chinese shares entering bear market territory, but a major one is a protracted slump in consumption and property. External pressure is also mounting as the AI trade wobbles.The irony is that China keeps winning the AI innovation race while its stock market gets nothing from it. The CSI 300 index is down 11% this year, while the Taipei and Seoul bourses are up 59% and 31%, respectively.
Since the “DeepSeek shock” of January 2025, Chinese labs have repeatedly impressed. July’s launch of Moonshot AI’s Kimi K3 proved DeepSeek was no aberration, and Stanford’s Institute for Human-Centered AI recently concluded that China is rapidly eroding America’s lead.