Blog · 3 Nov 2026
Has China's AI bubble already burst?
In today’s Finshots, we look at how the global AI boom turned into a debt-fuelled bubble and why that bubble may have already popped in China.But before…
In today’s Finshots, we look at how the global AI boom turned into a debt-fuelled bubble and why that bubble may have already popped in China.But before we begin, if you’re someone who loves to keep tabs on what’s happening in the world of business and finance, then hit subscribe if you haven’t already.
We strip stories off the jargon and deliver crisp financial insights straight to your inbox. Just one mail every morning. Promise!If you’re already a subscriber or you’re reading this on the app, you can just go ahead and read the story.The StoryFor the last few years, Wall Street has been debating a simple question. Is artificial intelligence the biggest bubble of our lifetimes, or the greatest technological leap since the internet?In the US, investors are still giving AI the benefit of the doubt.
That’s why the tech-heavy Nasdaq has barely flinched.But if you look across the Pacific, you’ll find that China’s AI rally has already come crashing down.Over the past four months, China’s STAR 50 index, which is the country’s main index of AI stocks, has crashed by 40%, wiping out nearly $480 billion in investor wealth.And because China pushed its AI ambitions particularly aggressively, the meltdown offers a glimpse of what could happen when AI hype collides with cold financial math.To understand why, we first need to look at how the global AI boom took shape. When OpenAI launched ChatGPT in late 2022, America’s tech giants panicked. Afraid of missing out on the next big technological shift, hyperscalers (companies that run the world’s biggest cloud networks) like Amazon, Google, Meta and Microsoft went on a spending spree.