Imagine two shops on the same street.
The first sells rice, soap, clothes, medicines. Things everyone needs, every day. The second sells chips and artificial intelligence software.
For six months now, in China, investors have been queuing outside the second. And the first is emptying out.
The numbers
According to Bloomberg, the stock indices grouping Chinese consumer goods companies have lost around 18% in six months. They have fallen back to very close to their lowest level in ten years.
Meanwhile, the technology index, heavily weighted towards AI companies, has more than doubled relative to its 2016 level.
And it is not just a matter of market mood. In the latest earnings season, consumer staples companies reported profits nearly half of what was expected of them.
The financial news agency sums up the situation in one image: consumer companies are living through a "lost decade", in the shadow of a government entirely focused on AI.
Why the money is leaving
Because AI tells a better story. An investor does not pay only for what a company earns today, but for what it promises to earn tomorrow. A laundry detergent brand promises to sell a little more detergent. An AI company promises to change the world. The choice is quickly made.
Because the state is pushing in that direction. Beijing has made AI a national priority, with a plan worth more than $500 billion to quadruple its computing power. When a government so clearly designates the sector of the future, the money follows.
Because consumers are buying little. Chinese households are spending cautiously, and the companies selling to them feel the effects directly. Their poor results make AI even more attractive by contrast.
The risk
That a promising sector attracts money is normal. That is even what markets are for.
The problem begins when the movement becomes so strong that it drains everything else. Companies making what people actually need find it harder to raise money to invest, hire, modernise. Meanwhile, capital concentrates on a single bet.
If that bet pays off, everyone will forget the lost decade. If it disappoints, we will discover that we neglected the essentials for a promise. This kind of concentration has a name when it goes wrong, and we have already discussed it with regard to the financial arrangements of American AI: a bubble.
What to take away
China is not a special case. Everywhere, AI has become the subject that draws attention and money. It simply is so more visibly there, because the state and the markets are pulling in the same direction.
But an economy is not only what promises the most. It is also what feeds, clothes and heals. When money forgets that for too long, it is rarely the investors who pick up the bill.