CNBC launched a newsletter called The China Connection. They did this on purpose. Someone pitched it in a meeting and other people said yes.
The newsletter reports that artificial intelligence is lifting parts of China's economy while real estate and domestic demand remain lackluster. Lackluster. That's the word they went with. Not collapsed. Not in free fall. Lackluster. Like a disappointing birthday party.
China's real estate sector represents roughly thirty percent of its GDP. But sure, AI is going to offset that. A bunch of server farms and chatbots will compensate for the fact that nobody can afford apartments and the ones they already bought are worth less than the debt they carry. This is like saying your leg is gangrenous but your hair looks fantastic.
Retail traders are now reading this newsletter and thinking they should buy Chinese tech stocks. They believe they have spotted an asymmetric opportunity. They have not spotted an asymmetric opportunity. They have spotted a newsletter with the word "AI" in it and their brain released dopamine.
Domestic demand remains weak because people without money tend not to spend money. This is a principle that confuses economists but makes perfect sense to everyone else. You cannot stimulate an economy by building more semiconductors if the people in that economy are too broke to buy anything that uses semiconductors.
The whole market is waiting for AI to lift it. The whole market will continue waiting. AI is not a crane. It is not a forklift. It is a sector that employs relatively few people and generates revenue by replacing other jobs. But CNBC has a newsletter about it now, so I guess everything is fine.
Somewhere in Shanghai a man just bought calls on a Shenzhen-listed AI stock using money he does not have because a newsletter told him the future is bright. The future is not bright. The newsletter has a paywall.
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