China makes great technology and the companies work as intended. One thing people don’t understand is that shareholders are not a priority. The companies are supposed to provide “social stability” not growth.
If a company grows too much it must either share its profits with the society or just be brought down. As you can observe shareholders are nowhere in the picture. Check BABA as an example.
That’s why so many Chinese people invested in properties.
China is designed so that the rich don't get infinitely richer in perpetuity forever thus creating a permanent aristocratic class of people who don't work forever
This was the main issue before the communists took over, a massive class of idle rich people who bought up on the land and lived luxurious lifestyles by collecting returns on capital. A massive population of landless serfs who lived paycheck to paycheck, their entire agricultural surplus getting taxed by the landlords.
The Chinese system is designed so that if for some reason you have a shiton of money, theres no way to grow that money infinitely without working.
Your only options are
1. Put it in the stockmarket (The Chinese government extracts profits from the companies when they make too much, caps them if they make too much profit, or demands they contribute to national priorities)
2. Put it into a bank owned by the Government (you lose money due to inflation)
3. Real estate (Many rich people flocked to real estate, until the government said homes were for living in, and not for speculation)
This is why there is a massive corruption network dedicated to funneling money and assets out of china
To get rich in China you need to build a company, To stay rich you need to keep building, your heir needs to keep building.
the state acts as a central aggregator, taking surplus value from capital and converting it into public goods that raise the overall baseline for ordinary citizens
This doesn’t particularly make sense to me, can someone help elucidate why this would impact Chinese stocks more than an equivalent company in different geography/government?
Is this related to the US govt banning internal DeepSeek use? A currency thing and prices are USD denominated? Chinese AI stocks were used to hedge and now aren’t?
I don’t see a purported reason, and it makes me feel like the article doesn’t want me to ask that.
Although I deeply respect the progresses in open AI research from China I'd never touch a single Chinese stock in my life.
Why not?
China makes great technology and the companies work as intended. One thing people don’t understand is that shareholders are not a priority. The companies are supposed to provide “social stability” not growth. If a company grows too much it must either share its profits with the society or just be brought down. As you can observe shareholders are nowhere in the picture. Check BABA as an example.
That’s why so many Chinese people invested in properties.
China is designed so that the rich don't get infinitely richer in perpetuity forever thus creating a permanent aristocratic class of people who don't work forever
This was the main issue before the communists took over, a massive class of idle rich people who bought up on the land and lived luxurious lifestyles by collecting returns on capital. A massive population of landless serfs who lived paycheck to paycheck, their entire agricultural surplus getting taxed by the landlords.
The Chinese system is designed so that if for some reason you have a shiton of money, theres no way to grow that money infinitely without working.
Your only options are
1. Put it in the stockmarket (The Chinese government extracts profits from the companies when they make too much, caps them if they make too much profit, or demands they contribute to national priorities) 2. Put it into a bank owned by the Government (you lose money due to inflation) 3. Real estate (Many rich people flocked to real estate, until the government said homes were for living in, and not for speculation)
This is why there is a massive corruption network dedicated to funneling money and assets out of china
To get rich in China you need to build a company, To stay rich you need to keep building, your heir needs to keep building.
the state acts as a central aggregator, taking surplus value from capital and converting it into public goods that raise the overall baseline for ordinary citizens
This doesn’t particularly make sense to me, can someone help elucidate why this would impact Chinese stocks more than an equivalent company in different geography/government?
Is this related to the US govt banning internal DeepSeek use? A currency thing and prices are USD denominated? Chinese AI stocks were used to hedge and now aren’t?
I don’t see a purported reason, and it makes me feel like the article doesn’t want me to ask that.
Have a look at the constituents of the STAR50 index: https://english.sse.com.cn/markets/indices/data/list/constit... Most of them have at best a tenuous connection to AI.
AI trade stumbles every 4/5 months, then it born again to new highs (like it was one week ago).
Chinese stocks are down because China economy is not in a good health.