China’s Tech Stocks Lose $480 Billion as Market Turmoil Deepens

China’s technology stocks have lost about $480 billion in market value in less than four months, as concerns over inflated valuations, AI demand, and export restrictions collide with renewed market volatility during a politically sensitive Chinese Communist Party (CCP) meeting.

The Shanghai STAR 50 Index, which tracks major tech and semiconductor companies, has fallen about 40 percent over the period, sharply reversing a two-year rally fueled by government support for the tech sector. On Oct. 27, the index fell 4.81 percent, while more than 4,900 stocks on China’s markets declined.

The broader CSI 300 Index, which tracks major blue-chip stocks on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, has fallen about 20 percent from its June peak.

The losses contrast with the relatively modest pullback in U.S. tech stocks and have raised questions about Beijing’s efforts to encourage household savings into equities and cultivate a more stable bull market.

According to Goldman Sachs data, AI-related stocks accounted for 42 percent of China’s stock market capitalization before the sell-off and 57 percent of trading turnover across China and Hong Kong-listed shares.

U.S.-based China current affairs commentator Li Linyi told The Epoch Times that the political environment has become more sensitive than in previous years, amid investigations of senior officials ahead of the Party’s 21st National Congress, expected in 2027.

Li said that officials and their associates affected by Chinese leader Xi Jinping’s purges could potentially use a stock market crash to exert political pressure, describing such a scenario as a “financial coup.”

Tech Shares Lead the Decline

The losses have hit companies that became favorites among retail investors during China’s push to develop its domestic AI and semiconductor industries.

Unitree, a Chinese robotics manufacturer whose initial public offering (IPO) attracted subscriptions more than 8,000 times the shares available, lost about half its share value in mid-October since listing in August, having recovered some ground since. Memory-chip maker ChangXin Memory Technologies has shed more than a quarter of its market value in the past month.

Chipmakers MetaX and Moore Threads—whose shares surged approximately 700 percent and 400 percent, respectively, on their first trading days last year—have also lost almost half their value since July. Optical-component manufacturers Zhongji Innolight and Eoptolink have fallen roughly 60 percent from their June and July peaks.

Chen Wensheng, a Hainan-based small-business owner and investor, told The Epoch Times that he bought shares in Unitree and similar companies after being encouraged by reports of strong government backing and the presence of state funds among their investors. He said he and his friends are now facing losses.

State-Backed Market Support

The latest declines have also renewed scrutiny of China’s state-backed efforts to stabilize share prices.

On Oct. 23, China’s Shanghai Composite Index rebounded after briefly falling below 3,600 points, with state-backed investors buying broad-market exchange-traded funds (ETFs). The index ultimately closed up 0.89 percent, but the recovery did not prevent renewed losses the following week.

The sell-off has undermined Beijing’s attempt to promote a so-called “slow bull” market, in which steady gains would encourage households to invest without the extreme volatility associated with China’s earlier market booms.

U.S.-based Chinese economist Li Hengqing told The Epoch Times that the Chinese regime’s market-support efforts are intended less to protect ordinary investors than to preserve Xi’s political standing.

He said state-owned enterprises and social security funds use public money to support share prices, potentially transferring losses to taxpayers. Such interventions may temporarily stabilize markets but cannot resolve the underlying lack of investor confidence, he said.

The political backdrop adds another layer of uncertainty. The current plenum is focused on strengthening Party discipline, while officials face pressure to demonstrate loyalty amid an extensive anti-corruption campaign.

Cheng Cheng-ping, a finance professor at Taiwan’s National Yunlin University of Science and Technology, told The Epoch Times on Oct. 24 that the emphasis on Party discipline, loyalty, and political correctness indicates that Beijing is prioritizing the containment of political, local-government debt, and financial risks over addressing weak economic growth.

Reuters, Tang Bing, and Zhao Fenghua contributed to this report.