Chinese AI stocks to draw $1.75B while banning what Silicon Valley does best

A wave of investment is heading toward Chinese technology companies, at the same time courts in the country have ruled that businesses cannot fire employees simply to replace them with automated systems.

The timing raises questions about whether protecting jobs might actually strengthen rather than weaken artificial intelligence development. Wall Street bank Morgan Stanley expects between $1.25 billion and $1.75 billion to move into Hong Kong’s technology stock index when two artificial intelligence firms join the benchmark on June 8.

The forecast, shared with Cryptopolitan, comes even as the Hang Seng Tech Index has fallen more than 11 percent since January started. Knowledge Atlas Technology, which operates under the name Zhipu AI, and MiniMax both began trading in Hong Kong this past January.

Share prices for both companies have climbed sharply. Morgan Stanley analysts bumped up their target price for Knowledge Atlas to 990 Hong Kong dollars from 560 dollars. MiniMax saw its target rise to 1,100 Hong Kong dollars from 990 dollars.

The two companies represent the first major Chinese businesses focused on AI models to sell shares publicly. Rivals like Moonshot, which runs the Kimi AI model, and StepFun have stayed private.

Zhipu stands out for models that handle coding tasks well. MiniMax has built a reputation for offering a wide range of capabilities, from creating text to generating audio. Many people using OpenClaw AI agent tools have picked MiniMax partly because Chinese AI models typically cost less than American alternatives.

That price gap is shrinking, though. In the first three months of this year, accessing Chinese AI models cost at least 17 percent of what American models charged.

A year earlier, the figure stood at just 5 percent. Morgan Stanley analysts think the leading Chinese AI model makers will each bring in at least $1 billion in revenue this year, with that amount more than doubling in the following year.

The bank’s analysts wrote that AI and large language model companies will become much bigger forces in Hong Kong stock markets, changing how the index looks, performs, and attracts money.

They noted strong backing from regulators, pointing out that technology firms accounted for 40 percent of money raised through Hong Kong initial public offerings so far this year and 43 percent of deals in the pipeline.

Tencent and Alibaba, the two biggest stocks by market value in the Hang Seng Tech Index, have both dropped by double-digit percentages this year. Morgan Stanley picked Alibaba as its top choice among Chinese internet stocks, viewing the e-commerce company as an AI investment opportunity across cloud computing and AI models.

Courts ban firing workers to make room for automation

Meanwhile, a Chinese court made a ruling last month that could reshape how companies there use automation. The Hangzhou Intermediate People’s Court decided that businesses cannot legally fire workers just to replace them with AI systems.

The case involved a worker told to accept a lower position because his job had been automated. He refused the demotion and was fired. The court said the company broke the law.

The ruling stated that employers are prohibited from shifting operating costs to employees. A longer section explained that AI technology can improve how businesses run, free up workers, and make conditions better for employees.

Companies can adjust to new technology trends, the court said, but they must consider workers’ legitimate rights and cannot use technological changes as an excuse to cut pay or end contracts on their own.

After Nigeria and India, China ranks third globally in trust toward AI, according to survey data. Multiple surveys have found similar patterns.

The contrast with America is stark. Americans say they dislike the economy despite strong job numbers and stock markets. They also express negative views about AI and the executives running AI companies.

As reported by Cryptopolitan previously, Polymarket is also on rising tech layoffs.

Micro drama boom shows AI creating new content markets

In entertainment, China has created a new format called micro dramas, short episodes lasting one or two minutes, designed for vertical phone screens.

The format took off during the pandemic and reached an estimated 660 million viewers in China during 2024. The shows are spreading to other countries quickly.

A South Korean production company called Vigloo now spends roughly 30 percent of its budget on AI tools. The company can finish a show in one month instead of three and at one-fifth the usual cost.

But Vigloo’s CEO, Neil Choi, said competition from China’s micro drama industry keeps intensifying as the country backs AI-driven content production.

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