A 1640 painting mocking the tulip bulb mania after the tulip bubble had burst.
Posted on 10/26/2026 7:44:24 PM PDT by yesthatjallen
China's AI stock rally has collapsed, wiping out about $480 billion as the STAR50 index of AI and chip companies fell 40% from its July high.
US AI stocks have taken a far smaller hit so far. The Nasdaq is about 6% below the record it set three weeks ago. This week's Big Tech earnings will test whether that gap holds.
How China's AI Bubble Burst
Analysts have pointed to stretched prices, tax bills, and the risk of US bans on Chinese data-center equipment.
The damage is wide. AI stocks account for 42% of China's market value and 57% of its trading, according to Goldman Sachs.
The broader CSI 300 index of China's biggest companies entered a bear market last week, as BeInCrypto reported.
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(Excerpt) Read more at finance.yahoo.com ...
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Can a fully automated economy support the people within that economy?
At the fast pace of technology development AI designs are already out of date before they can be built.
At the fast pace of technology development AI designs are already out of date before they can be built.
In 2001: A Space Odyssey showed people eating meals while watching video on flat portable screens.
An amazing prediction.
The next bit of the movie features AI going berserk and killing everyone.
1) Demographics. First the one child policy then the total collapse of the birth rate even after the one child policy was lifted. China is already older on average than the US. It is the fastest aging society (among the major economies) in the world. Their dependency ratio is growing very fast.
2) The largest real estate speculation/debt bubble in history.....their dwarfs the size of the one in the West which caused the 2008 global financial crisis.
3) the only way to try to solve problem #2 above is to try to lean even more heavily into manufacturing and exporting their massive surplus production. But the 2 largest markets - the US and increasingly the EU now - are steadily turning more protectionist and will not allow them to dump into their markets. There are no other untapped markets anywhere near the size of those two so any suggestion that they could just export more to Africa/South America/India, etc automatically fail.
Automation can help as can productivity increases but its not enough to offset the effect of aging. It makes the loss of productivity due to aging not as bad as it otherwise would have been, but it still has a big effect. For example, in 1990, Japan had a GDP per capita higher than the US ie $26,345 vs $23,840. Today US GDP per capita is $95,210 and Japan's is $35,400. Japanese workers did not become less productive. Japan just aged much faster than the US. Japan's dependency ratio increased a lot.
ok, but isnt’ automation and roboticization far more rapid now than in the 1990s?
FLT — from what I read, in 1990, Japan was competitive or closing in on Western and U.S. manufacturing/labor productivity levels. By 2004, the U.S.–Japan total factor productivity gap expanded sharply to roughly 79.5%, and recent data shows Japan’s labor productivity is only about 56% to two-thirds of U.S. levels - https://www.tandfonline.com/doi/full/10.1080/09535310701572024
Now i’m no expert on Japan, but when I went there in 2017, they were stuck in the 1990s - they used cash everywhere, and seemed to not be computerized so much (fax machines!).
When I went to Shanghai on a short visit in 2024, it was high-tech and energetic.
i’d like them to decline, as they are moving scary fast, but I didn’t see it myself
Trump’s economic war on China is working.
The AI fallout is going to make the telecom bust look like amateur hour.
According to Amazon, they have have $5billion worth of AI racks just sitting in warehouses because there isn’t enough power for them. Plus they are on the hook for $3 billion/month for more racks.
At some point, Amazon will need to stop buying, which Nvidia won’t need to produce as many, but that certainly won’t look good in their quarterly reports.
If Amazon can’t deploy all the racks they own, could that also hold true for Microsoft, Meta, or any of the other companies? Oracle is taking a bit of a beating. It’s a very circular economy unfortunately.
I’m of the opinion that the Anthropic IPO is being done because they know there are rough roads ahead and investors want to cash out and collect what they can, hoping that hype will carry the day.
Imagine a world where everything is given and no work required. We see how that works within the welfare state and the nepo class.
Without work, sacrifice and delayed gratification people become mush
Automation can definitely help....but it can't completely offset the effects of an aging and shrinking workforce. Nobody has ever managed that or even come close to it. Maybe at some point in the future but as for now, that remains a distant dream.
Like Europe, Japan got very good at manufacturing the old way....ie metal bashing, etc. They didn't keep up in the digital/high tech spaces. That's where America forged ahead even after not being as efficient as Japan with things like auto production. Now add in that the Japanese workforce is smaller than it used to be and you see how a country can start to really fall behind even though each worker is still quite productive.
The other thing with automation....China's is focused on manufacturing. They have a huge manufacturing surplus because their economy is geared so heavily toward exports. But what happens when the US and EU either slap massive tariffs on you or - like the US for example - simply bans your electric cars from entering their market? How much does automation help you when you can't access the market?
China's Demographics
Declining numbers: China's total employed workforce fell to around 725 million people in 2025, marking an annual decrease of roughly 9 million people as part of a downward trend that began around 2014.
Working-age contraction: The working-age population (traditionally defined as ages 16 to 59) dropped to about 61% of the total population, down from over 70% a decade earlier.
Long-term projections: Roughly 250 million Chinese workers are projected to leave the labor force by 2050, driven by the legacy of the one-child policy, a low fertility rate of around 1.09 births per woman, and a rapidly aging society.
A 1640 painting mocking the tulip bulb mania after the tulip bubble had burst.
I've been using GIMP to create memes for over 20 years now. Using AI I can turn my ideas into finished product in about 5 minutes. It used to take me hours!
Owning stocks
In a supposedly communist country
China is fine.
Everyone should read “The Butlerian Jihad” and watch 2001 .
Chuck Fina.
Good points, FLT.
i’m not completely convinced = i’m not sure why, but i don’t know enough to debate either way.
The thing is that i’m not completely convinced that a declining population will mean a decrease in economy.
I also think that globally every nation will have a declining population by the end of the century.
But again, these are just my thoughts - I’ve not read nor know enough to have an informed opinion, so I’m just looking for learning from all of you
Compared to the United States, China doesn’t have a war addicted war industry. China doesn’t have the most demanded currency, that’s the dollar, which gives a country the ability to abuse it and get in a lot of trouble.
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