China’s stock market has entered bear-market territory, with the CSI 300 Index falling around 20% from its June peak as investors reassess the country’s economic outlook. The sell-off has also affected major Chinese stocks listed in Hong Kong, raising concerns about technology valuations, consumer spending and government support.

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One key reason is fading enthusiasm for artificial intelligence (AI) stocks. Investors are questioning whether rising valuations can be justified by future profits, while a wider global technology sell-off has added pressure to Chinese shares.

Weak domestic consumption is another concern. Although China’s third-quarter economic growth exceeded expectations, investors are looking for stronger household spending, healthier corporate earnings and clearer signs of a broad economic recovery.

The third factor is uncertainty over government stimulus. Beijing has taken steps to support markets, but investors remain unsure whether further measures will be enough to boost demand and sustain business growth. Slower-than-expected quarterly profit growth at battery maker Contemporary Amperex Technology has also added to market caution.

The correction may create opportunities in selected stocks, but lower prices alone do not guarantee value. A sustained recovery will likely depend on stronger earnings, improving consumer confidence and policies that deliver lasting economic support.