TheChek News Flow

Wealthy Americans pour record sums into private credit funds

Individual investors among the biggest sources of growth as institutional demand slows

Private credit funds are drawing in record sums of capital from everyday investors, offsetting a slowdown from large institutions as wealthy individuals are lured in by the higher returns on offer.

Affluent individual investors in the US have pumped $48bn into private credit funds in the first half of this year, already surpassing the entire haul in 2023 and on pace to eclipse the high-water mark of $83.4bn set in 2024, according to investment bank RA Stanger.

European investors are also diving in, with assets in so-called evergreen private debt funds across the continent more than doubling from a year ago to €24bn at the end of June, according to consulting firm Novantigo.

The inflows underscore the growing importance major private investment groups are now placing on individuals, with analysts at rating agency Moody’s calling it “one of the biggest new growth frontiers in the industry”.

It also represents just the tip of the spear for groups that had lobbied heavily to open the broader US retirement market up to private equity and credit, which culminated with US President Donald Trump’s August executive order paving the way for their broader inclusion in 401k plans.

“The growth is coming from a very underpenetrated market,” said Brad Marshall, Blackstone’s head of private credit. “Private markets offer investors a premium [over] what they can get in public markets.”

Fundraising in traditional drawdown private credit funds has slowed alongside a broader downturn for the leveraged buyout industry, which has struggled to return capital to investors in the years since the Covid-19 pandemic and has, in turn, suffered weaker inflows.

Data from Preqin shows that private credit vehicles pitched to large investors, including endowments and pensions, have raised successively less every year since hitting a peak in 2021.

New contributions from wealthy individuals, by contrast, have accelerated. They have been spread across a handful of different vehicles, complicating comparisons between firms. The Stanger data focuses on non-traded business development companies as well as interval funds, which offer redemptions at set periods. Collectively, they are known as evergreen funds, because they do not wind down at a specific date in the future. Investors can also continuously put more money in.

Flows into the vehicles were stable during market swings earlier this year, after Trump launched his tariff blitz against most of the US’s largest trading partners. That has bolstered confidence that demand from individuals is durable, and that smaller investors will not race to redeem at the first sign of turbulence.

“It reinforced what we’d want to see, people not running from alternatives but looking at alternatives and saying there was stability there,” said John Sweeney, who runs wealth solutions at Brookfield.

Blackstone has long dominated the market, although it is facing intensifying competition from rivals including Apollo Global Management, Blue Owl, Ares Management and BlackRock’s HPS Investment Partners.

Blackstone’s private credit fund, known as Bcred, has drawn in $6.5bn so far this year and $11.7bn over the past 12 months. On the average day markets are open, individual investors are placing more than $50mn of orders for the fund, the Stanger data shows, at the top of the pack.

Those inflows, supercharged by leverage, have pushed the size of Bcred up more than 50 per cent in the past two years to $73bn in June.

Others are catching up. Apollo’s offering — Apollo Debt Solutions — has raised $6.4bn over the past year, while two large funds from Blue Owl have taken in roughly $7bn. Ares’s main offering for wealthy individuals, the Ares Strategic Income Fund, has raised $5bn.

And a smaller investment management firm, Cliffwater, has won massive share among independent wealth managers. Its fund has gone toe-to-toe with Blackstone, raising nearly $11bn over the past year, and now stands at more than $30bn.

Blackstone was earlier than many of its rivals as it charged into wealth management offices, pitching major players such as Morgan Stanley and UBS, as well as the independent advisers that direct how millions of Americans save for retirement.

That resulted in near total market share for its product among other BDCs that are not publicly traded, sitting just below 90 per cent in 2021, according to Stanger. While it has remained the top draw for wealth managers, that figure has fallen to 28 per cent among similar vehicles amid a wave of new fund launches.

Raj Dhanda, global head of wealth management at Ares, said wealth managers had been keen to expand the number of funds they could pitch clients given that Blackstone’s “share of the market was probably uncomfortably high”.

But he noted it was still a small set of asset managers drawing in investors. “After a small group of the leading global alternative managers, the flows fall off considerably,” he said.

European private markets are also seeing a surge of interest from individual investors, sparking a wave of new fund launches across the continent. Novantigo counts 37 private credit evergreen funds in the market, up from just six in 2022. Ares and Blackstone have both been fundraising, and HPS is in the midst of launching its own vehicle, according to a filing.

Private credit itself has moved into the mainstream after post-crisis regulations limited lending by the traditional banking system. Major asset managers stepped into that void, lending directly to businesses and consumers.

The rapid pace of inflows has caused consternation from some inside the industry, even as their management fees swell. The inflows have materialised alongside a broad market rally, which has led to stiff competition among investors in private and bank syndicated loans. That has weighed on returns, as private lenders compete aggressively to win deals.

“It’s a tricky investment environment driven by the imbalance between supply and demand of capital,” Joshua Easterly, a top executive at Sixth Street, said on an earnings call this summer.

“Competition is elevated, and it’s increasingly difficult to generate outsized returns.”

Kemi Badenoch says UK move away from fossil fuel extraction is an ‘act of economic disarmament’

Kemi Badenoch has pledged to extract every last molecule of oil and gas from the UK North Sea, as the Conservative party seeks to distance itself from its previous support for net zero and to attack Labour for rising energy bills.

The Conservative party leader said the North Sea Transition Authority regulator would be rebranded to the North Sea Authority under a Tory government, with environmental regulations slashed in favour of a single mandate to “maximise the extraction of our oil and gas”.

Badenoch said the UK’s move away from oil and gas extraction was a “unilateral act of economic disarmament”, adding it was “absurd” the country was “leaving vital resources untapped whilst neighbours like Norway extract them from the same seabed”.

“A future Conservative government will scrap all mandates for the North Sea beyond maximising extraction,” Badenoch said. “It is time that common sense, economic growth and our national interest came first . . . We are going to get all our oil and gas out of the North Sea.”

Badenoch’s statement, which comes ahead of a speech at a major oil and gas conference in Aberdeen on Tuesday, marks a significant departure from the previous Conservative government that hosted UN Climate Talks in Glasgow four years ago.

Badenoch has already described reaching net zero emissions by 2050 as fanciful despite the policy becoming law under the previous Conservative government in 2019, and her latest pivot seeks to tap into growing discontent over rising energy bills.

The Tory position stands in stark contrast to the Labour government that has vowed to end new licences for oil and gas exploration, arguing they are not compatible with the Paris Agreement goals of limiting global warming and that they would not lower prices.

Badenoch’s move comes as the Conservative party is trailing Nigel Farage’s populist Reform UK and the ruling Labour party in the polls.

Badenoch, whose position as leader is widely seen as vulnerable less than a year after she took over from Rishi Sunak, has been attempting to stake out a series of more conservative economic positions at a time of concerns over slow growth, rising government debt and higher energy bills.

Ed Miliband, energy secretary, has pledged to make the UK’s electricity supply carbon neutral by 2030, which would require huge investment in upgrading the grid and technologies such as offshore wind and carbon capture, utilisation and storage.

Last week, Ofgem, the energy regulator, said the so-called price cap on household energy bills would rise this winter despite wholesale prices of natural gas falling.

Ofgem said higher prices for consumers were being driven by increasing transportation costs and support for other government schemes.

The UK oil and gas sector boomed in the 1980s helping fund Margaret Thatcher’s reforms of the UK economy. While production peaked more than two decades ago, the industry has warned government policies are accelerating the drop in output from higher taxes to tight restrictions on developments.

Badenoch said the energy crisis, which started with Russia disrupting gas supplies ahead of its full-scale invasion of Ukraine, “underscored that our energy supplies are a matter of national security”.

She argued that the UK had already cut carbon emissions faster “than every other major economy since 1990” and blamed that for higher energy prices in the UK.

The Department for Energy Security and Net Zero said it remained focused on “delivering the manifesto commitment to not issue new licences to explore new fields”, arguing new discoveries would “not take a penny off bills, cannot make us energy secure, and will only accelerate the worsening climate crisis”.

The £10bn agreement will deliver major boost for British defence industry and Glasgow shipyards

The UK defence sector has beaten out international rivals to land its largest ever warship export deal from Norway, as Oslo and London move to deepen defence ties in the face of increasing Russian aggression in the Arctic and north Atlantic.

The deal, which the UK Ministry of Defence said would be worth £10bn to the UK economy, will see Norway buy at least five British Type-26 frigates that will primarily be built in Glasgow by BAE Systems, with first deliveries expected in 2030.

The US, France and Germany had also been competing for the contract, but Norwegian Prime Minister Jonas Gahr Støre said the “strategic partnership” with the UK was “the right decision”.

It would “strengthen our and Nato’s ability to patrol and protect the maritime areas in the High North”, he added.

The MoD said, under the agreement, the UK and Norway would operate a “combined fleet” of 13 anti-submarine frigates “to detect, classify, track and defeat hostile submarines”.

Strengthening Europe’s ability to counter Russian submarine activity in the north Atlantic and Arctic has been a key area of focus for US President Donald Trump as his administration looks to Nato allies to strengthen regional defence.

“With Norway, we will train, operate, deter, and — if necessary — fight together,” UK defence secretary John Healey said on Sunday, adding the frigates would help “hunt Russian submarines” and “protect our critical infrastructure”.

“Our navies will work as one, leading the way in Nato,” Healey said.

UK Prime Minister Sir Keir Starmer in a call with Støre said the deal would lead to “unparalleled interoperability for Norwegian and British forces” and comes ahead of an expected new defence agreement between the two countries.

In the past week, UK, Norwegian and US forces, including Poseidon submarine-hunter aircraft, have been active in the north Atlantic in what was reported as an operation targeting the tracking of at least one Russian submarine.

The MoD confirmed the activity was an “operation” rather than a training exercise, without providing further details.

Norway and the UK also collaborate on protecting critical North Sea infrastructure such as gas pipelines, electricity interconnectors and data cables from hybrid attacks, an area of increased concern since Russia’s invasion of Ukraine.

The deal, the largest ever UK warship export contract by value, is expected to provide a major boost for the defence industry at a time when the government has targeted the sector as key to its economic growth plan.

BAE has also licensed the Type-26 design to Canada and is also building the warships in Australia under a contract with Canberra, while Labour has pledged to raise defence spending to 3.5 per cent of GDP by 2035 from 2.3 per cent in 2024.

Healey said the contract with Norway would support 4,000 jobs in the UK with more than half of those in Scotland at BAE Systems’ shipyards in Glasgow, though one person familiar with the deal said it would sustain existing jobs rather than leading to increased hiring.

Charles Woodburn, BAE chief executive, hailed the deal as reflecting Norway’s “confidence in British industry’s ability to deliver”. 

Another person familiar with the deal said BAE’s order book at its Glasgow dockyard was now filled up for years to come, with there expected to be knock-on benefits to other shipyards in Scotland and the UK who could win a higher share of future MoD and international orders.

The Norway deal alone is expected to support 432 companies in the UK, the MoD added, while Norway said the two countries had a “draft agreement” for the UK to guarantee industrial co-operation with Norwegian industry “equivalent to the total value of the acquisition”.

Hamas-backing Qatar has bankrolled film and stage projects by socialist Zohran Mamdani’s Israel-bashing movie-director mom — and one of its royals is now pushing her son’s mayoral bid, The Post has found.

Sheikha Al-Mayassa bint Hamad Al-Thani, sister to the ruling emir, and the state-funded cultural institutions she controls, have supported Mira Nair and her creative projects since at least 2009, even extending a personal invitation to participate in the cultural program the country organized as part of the festivities around hosting the 2022 World Cup.

Since mid-June, Sheikha Al-Thani has taken to promoting Mamdani’s mayoral candidacy on social media, boosting news of favorable polling on Instagram and posting fire emojis under a TikTok video of him embracing Nair.

“They are buying somebody who is willing to be bought and at the time of their choosing they will ask for what they want,” warned Danielle Pletka, a foreign policy expert at the American Enterprise Institute think tank, of Nair’s Qatar ties. “They need a rainbow coalition of people who will support the ideology they promote: sometimes it will be Islamism, sometimes it will be antisemitism, sometimes it will be anti-Israel.”

The Post found extensive ties between the Queens assemblyman’s mom and the Qatari elite, including:

• In 2009 her film ‘Amelia’ opened the first-ever Doha Tribeca Film Festival in the Gulf regime’s capital.
• From 2010 until 2014, the Doha Film Institute — founded by Sheikha Al-Thani — underwrote a “bootcamp” to train Qatari students in screenwriting and filmmaking at Nair’s Maisha Film Labs in East Africa and in Doha, according to both organizations’ websites.
• The Doha Film Institute also paid the entire $15 million budget of Nair’s 2012 film “The Reluctant Fundamentalist,” one of the first movies it produced. The flick, which had previously struggled to obtain financing, tells the story of a Pakistani immigrant who suffers mistreatment at the hands of U.S. authorities after 9/11, and opened the Doha Tribeca Film Festival that year.
• Nair’s film “Nafas,” about historic Qatari pearl divers, was the first movie commissioned by the Qatar National Museum, which Sheikha Al-Thani chairs. It premiered at the museum’s 2019 opening, which Nair attended, and remains one of its flagship exhibits. Its budget has not been made public.
• A company Nair set up in her native India did $102,000 in business in 2022 and 2023 with event management firm Agence Publics Qatar, which shares its chairman with the Qatar Engineering & Construction Co., a major player in Qatar’s piggy-bank oil and gas industry, according to LinkedIn and publicly-listed import records collected by private supply chain-monitoring firms.
• The country’s most high-profile support for the auteur came in 2022, when state-owned Qatar Airways and Qatar Creates — another of the sheikha’s pet projects boosting the country as a cultural destination — produced an extravagant Nair-directed stage adaptation of her Golden Globe-nominated film “Monsoon Wedding” as part of the World Cup festivities.

The filmmaker has presented herself a voice for the “marginalized,” while her son has pledged to make New York an “LGBTQIA+ sanctuary city.”>

Thousands of migrant workers died building facilities for the World Cup in Qatar’s 125-degree temperatures amid conditions human rights activists described as “modern day slavery.”

But in an interview with the website Qatar Happening during the soccer tournament and the ‘Monsoon Wedding’ musical’s run, Nair had only praise for the regime and her royal patron.

“Her Highness Sheikha Al Mayassa bint Hamad Al-Thani has loved the movie but also supported the inception of this musical over several years,” Nair said.

Nair has boycotted the Haifa International Film Festival over Israeli policies she says “privilege one religion over another.” But Qatar bans non-Muslims from practicing in public, and the State Department has warned the country is “pursuing a number of actions which will ultimately lead to the eradication” of its Bah’aii religious minority.

Despite these well-documented abuses, as recently as November 2024, Nair was photographed attending a high-profile exhibit opening at the Qatar National Museum. There is no record of her ever speaking out on the regime’s notoriously deplorable human rights record.

The filmmaker did not respond to repeated requests for comment, nor did the Qatari entities that have financed her work.

Critics have called Qatar “America’s ultimate ‘frenemy,’” as it provides support to anti-U.S. Islamist organizations while simultaneously hosting an American airbase. Jonathan Schanzer, executive director of the nonprofit Foundation for the Defense of Democracies, called it “both arsonist and firefighter”: backing destabilizing organizations like Hamas and the Taliban, then offering itself as a mediator with the groups on behalf of the West.

Schanzer said it was concerning only “one degree of separation” could exist between the country’s ruling elite the mayor of America’s biggest city, given how the Qataris have used their country’s vast wealth to bribe ex-New Jersey Sen. Bob Menendez and figures in the European Parliament.

“The Qataris are hyperactive in terms of international diplomacy, international investment, and everything that they do is designed to spread their funds and spread their influence,” he warned.

There is no publicly available evidence of a direct relationship between Mamdani and the Qatari regime. The assemblyman maintained he had never traveled to Qatar, nor received direct financial assistance from the country’s institutions.

But his campaign declined to answer whether he had received such assistance from his mother, or whether he had had contact with the sheikha, and would not directly condemn the Al-Thani family’s rule—only attesting to “his belief in universal human rights and the freedom to advocate for justice everywhere.”

“The attempt to weaponize his mother’s career against him is an insult to voters who care about actual issues, not manufactured distractions,” said campaign spokeswoman Dora Pekec.

Investors are piling back into funds that buy junk-rated corporate bonds and loans, despite elevated default rates

So much for the dog days of summer. Companies with low credit ratings are feverishly issuing new bonds and loans to capitalize on the appetite for risk that is driving stocks to record highs.

Buying by individual and institutional investors is pushing up prices for junk debt and driving down yields to levels not seen since before President Trump’s “Liberation Day” tariffs in April. That is prompting companies to refinance existing debt and slash their interest expenses.

One possible danger: Defaults among junk-rated companies have been elevated. If tariffs fuel inflation or slow down the economy, analysts say more defaults are likely. That means investors could lose out on their bets and likely see prices of other high-yield bonds fall.

Investors have been piling back into high-yield mutual funds and exchange-traded funds since May.

They are betting U.S. economic activity will strengthen if the Federal Reserve begins cutting interest rates as expected in September. But there are also signs tariffs are pressuring corporations.

Downgrades accounted for two-thirds of S&P Global Ratings’ credit-rating actions in the second quarter, up from about half in the first quarter.

The average yield of around 6.75% is still juicy enough to attract buyers. The premium for junk bonds—or the spread on yields compared with Treasurys—remains slightly above its recent low in January, suggesting the rally could continue.

Issuance of junk-rated bonds and loans hit a monthly record of $240 billion in July, according to data from JPMorgan Chase. This month is also expected to be the busiest August ever, with total issuance set to exceed $100 billion.

That brings the amount companies have raised from junk bonds and loans so far this year to $930 billion, just shy of the $1 trillion issued during the same period in 2024, despite the credit freeze this spring.

Most of the deals refinanced existing debt, but others went to less conservative uses. Aircraft parts maker TransDigm Group issued a $9 billion bond in August to fund a dividend to shareholders.

“If the markets stay in the condition they are, they will remain busy through the rest of the year,” said Trip Morris, co-head of leveraged finance at Wells Fargo.

Funds that make private loans to riskier corporations have been booming in part because they pay even higher yields than their public counterparts.

The money managed by business development companies, which make private loans to small and midsize companies, jumped by about 33% over the 12 months ending in June, according to data from LSEG’s loan data unit.

The performance of the funds’ portfolio companies has been generally stable, according to Morgan Stanley research. But smaller borrowers have been pressured by tariffs and weakening consumer spending, pushing the ratio of delinquent loans held by BDCs to 2.9% at the end of June. That’s up from 2.7% in March and about 2.25% in December.

Signs of trouble are also emerging in public high-yield bonds and loans, where the default rate has remained above the 30-year average since July 2023. That is a longer stretch than any of the previous three default cycles, including the subprime credit crisis, according to data from S&P Global Ratings.

The period of elevated defaults has the potential to drag if the risk of runaway inflation prevents the Fed from sharply cutting interest rates. If interest rates remain elevated, larger junk-rated companies could start to buckle under their debt loads.

The current default rate of 4.7% is still well below the 12% peak hit in 2009.

With growing fears of an AI bubble, Beijing is charting a pragmatic alternative to Silicon Valley’s pursuit of artificial superintelligence

The U.S. is spending billions to win the race to artificial general intelligence, while China focuses on practical, low-cost AI applications.

China is integrating AI into many sectors, such as agriculture and medicine, and is embracing open-source models to boost its AI industry.

U.S. trade restrictions have made it difficult for China to compete in advanced AI models.

The U.S. is spending billions of dollars and burning gigawatts of energy in a rush to beat China to the next evolutionary leap in artificial intelligence—one so great, some boosters say, that it will rival the atomic bomb in its power to change the global order.

China is running a different race.

Since the release of OpenAI’s ChatGPT nearly three years ago, Silicon Valley has spent mountains of money in pursuit of AI’s holy grail: artificial general intelligence that matches or beats human thinking. Enthusiasts say it will give the U.S. insurmountable military advantages, help cure cancer and solve climate change, and eliminate the need for people to perform routine work such as accounting and customer service.

In China, by contrast, leader Xi Jinping has recently had little to say about AGI. Instead, he is pushing the country’s tech industry to be “strongly oriented toward applications”—building practical, low-cost tools that boost China’s efficiency and can be marketed easily.

The diverging visions represent a head-to-head bet with significant stakes. If China’s gamble turns out to be wrong, it could find itself lagging far behind the U.S. in the most consequential technology of the 21st century.

But if AGI remains a distant dream, as more people in Silicon Valley now believe, China will be in position to steal a march on its global rival in wringing the most out of AI in its current form, and spread its applications worldwide.

Already in China, domestic AI models similar to the one that powers ChatGPT are being used, with state approval, to grade high-school entrance exams, improve weather forecasts, dispatch police and advise farmers on crop rotation, say state media and government reports.

Tsinghua University, China’s equivalent of the Massachusetts Institute of Technology, is rolling out an AI-powered hospital, where human doctors will be assisted by virtual colleagues armed with the latest data on diseases. Intelligent robots are being deployed to run automotive “dark factories” and inspect textiles for flaws while still on the loom.

“They see highly impactful AI applications not as something to theorize about in the future but as something to take advantage of here and now,” said Julian Gewirtz, a former National Security Council official who specialized in tech competition with China during the Biden administration.

U.S. tech companies are developing plenty of practical applications using current AI, of course. Google has wired its latest Pixel smartphones to do real-time translation, while U.S. consulting companies are using AI agents to build PowerPoint decks and sum up interviews for clients. Others are using it to improve drug discovery and food delivery.

But unlike the U.S., which largely leaves the industry to its own devices, Beijing is putting the full muscle of the state behind its vision. In January, the central government unveiled an $8.4 billion AI investment fund focused on supporting startups. Local governments and state banks have since rolled out their own funding programs, while cities have published AI development plans as part of a campaign dubbed “AI+.”

On Tuesday, China’s cabinet spelled out broader ambitions for the campaign, calling for an even stronger push to integrate AI into science and tech research, industrial development and other areas to “comprehensively empower” China’s economic development by 2030.

China is also more actively embracing open-source models that are free for users to download and modify, making it cheaper and easier for Chinese companies to build businesses around the technology. That approach is helping Chinese AI spread globally, a trend that has shaken Silicon Valley into following suit.

That emphasis is somewhat different from the ambitions of many of the U.S.’s biggest tech players, who believe that machines that can outthink humans will revolutionize science, open up entirely new fields of inquiry and transform the American military.

Some in the tech industry have predicted that artificial superintelligence could arrive as soon as 2027. Companies such as Meta, Google and OpenAI are spending lavishly in a competition to acquire the talent, data centers and energy they need to be first.

A congressional commission focused on competition with China has floated a “Manhattan Project” for AGI to ensure the U.S. wins the race.

But OpenAI’s highly anticipated release in August of GPT-5, a model the company had initially touted as a major steppingstone on the path to AGI, left many users underwhelmed. OpenAI’s Sam Altman acknowledged the bumpy rollout and has since tried to tap the brakes on AGI hype and warned about the possibility of an AI investment bubble.

Other Silicon Valley titans have also started to waver, opening the door to the idea that China’s approach might make more sense.

“It is uncertain how soon artificial general intelligence can be achieved,” former Google Chief Executive Eric Schmidt and technology analyst Selina Xu wrote in a recent opinion column for the New York Times.

“In being solely fixated on this objective, our nation risks falling behind China, which is far less concerned with creating A.I. powerful enough to surpass humans and much more focused on using the technology we have now.”

The Chinese government’s enthusiasm for more-practical uses of AI is visible in Xiong’an, Xi’s built-from-scratch dream city two hours south of Beijing.

In February, the city announced the release of an agricultural AI model, using technology from the Chinese startup DeepSeek, which gives local farmers guidance on crop selection, planting and pest control, according to a local government report. The city’s meteorological service is using DeepSeek to improve the accuracy of weather reports. DeepSeek is also helping local police analyze case reports and decide how to respond to emergencies.

Xiong’an’s branch of 12345, a government question hotline that fields hundreds of thousands of calls a day nationwide, is using DeepSeek to sort and route inquiries.

A major portion of government investment is going to build data centers. But unlike the sprawling facilities being built in the U.S. to train cutting-edge models, the Chinese versions tend to be smaller.

To a large extent, Beijing has no choice but to break a different trail on AI. U.S. trade restrictions, particularly on high-end semiconductors, have made it difficult for Chinese AI companies to compete head-to-head with American giants in scaling up the training of the most advanced models.

The choice makes even more sense given growing uncertainty about the return on investment of chasing scale, said Jeffrey Ding, a professor at George Washington University and author of ChinAI, a newsletter focused on Chinese AI.

“You let the technology leader, the U.S. in this case, eat the cost of exploration, and then you try to be the fast follower or be the one who optimizes for implementation,” he said.

To be sure, some Chinese companies, including DeepSeek and Alibaba, have said they would pursue AGI. And some analysts have speculated that China could be trying to keep a lid on some of its AGI ambitions.

It is possible, even likely, that Xi will decide at some point to more aggressively pursue AGI, said Kendra Schaefer, head of tech-policy research at Trivium China, a Beijing-based consulting firm. But he will do so cautiously with plenty of safeguards, she said, given the potential risk that thinking machines could pose to Communist Party stability.

“It is one of the most risk-averse governments on the planet,” she said.

As with the internet, which had to weather the dot-com crash and years of development before being able to rewire the global economy, it could take decades to determine winners and losers in AI, according to George Washington University’s Ding.

The U.S. has important advantages over China in harnessing new technologies, he said, including a broad education system beyond elite universities that can spread technical knowledge widely.

If it is careful to maintain that edge, Ding said, the U.S. has a good chance at eventually beating China at its own race.

Rise of AI shopping ‘agents’ set to transform ecommerce

OpenAI, Perplexity and Google create AI-powered features, leading brands to rethink how they sell products online

The world’s leading artificial intelligence companies are betting that shopping will become a major application of AI “agents”, in a shift that is set to transform the multibillion-dollar ecommerce sector.

OpenAI, Perplexity, Google, and Microsoft have in recent months introduced AI-powered features that allow users to search for products through chatbots, with autonomous agents able to complete orders on behalf of consumers.

The rise of AI-powered agents has prompted sellers and brands to rethink how they sell products online, in particular how their products are spotted by AI systems and recommended by chatbots.

Advertisers are employing techniques — such as creating longer URLs with keywords or securing a mention on websites considered to be more authoritative by bots — to appear more prominently in AI-generated results.

Start-ups, including Profound, fashion-focused Refine and Algolia, have also emerged, offering the ability to monitor brand presence in AI chatbot responses.

Profound co-founder James Cadwallader said consumer behaviour is reaching an “inflection point” where people may no longer visit ecommerce sites.

“AI [agents and chatbots] steal or hijack that consumer from the brand,” he said. “Eventually, the consumer will only interact with the ‘answer engine’, and agents will become the primary visitors for websites and the internet.”

At the same time, AI services are being increasingly used as a search tool. Almost 60 per cent of European Google searches no longer result in a click, according to data from search engine marketers Semrush. Instead users rely on the AI-generated text “overview” that helps to answer their query.

Analysts at Gartner anticipate that traditional search engine volume will fall 25 per cent by next year, owing to the rise of generative AI chatbots and agents.

AI companies are launching ecommerce services to utilise these developments. OpenAI released an updated version of its Operator shopping system, renamed Agent, which can complete tasks within a web browser, highlighting shopping as one of its core use cases.

For example, when a user asked the system to purchase ingredients for a roast dinner with a dessert, the system navigated to a supermarket website, added the necessary items to the shopping cart and then handed control back to the user to complete the purchase.

OpenAI also plans to take a cut from online product sales made directly through ChatGPT by introducing an integrated checkout feature that will allow users to complete transactions without leaving its platform.

Perplexity recently launched its Comet agentic browser, which completes tasks across different apps on the desktop, such as calendars, websites and emails.

Microsoft’s “Action” feature can also browse the web for shopping requests. Google’s new “AI mode” brings up different product options and the company recently released an AI product tracker, which alerts consumers when the price of a desired item has dropped to a certain level.

“Shopping has to be a deeply personalised experience that resonates with users,” said Lilian Rincon, vice-president of product for Google Shopping. She added that Google’s latest features are designed to save consumers “time and effort”, preventing them from “having 20 tabs open, trying to research different products, and it being complex and painful.”

AI chatbots or agentic systems primarily select products for inclusion in their results by picking one of the top results in traditional search engines. Google, however, uses a combination of advertising and search results, alongside personal data already stored on users, to provide more tailored recommendations.

This means brands can sometimes target them through so-called search engine optimisation (SEO) techniques. However, marketers are adopting new methods to improve the likelihood of brands appearing in AI-generated results.

Nikhil Lai, an analyst at Forrester, said this requires a focus on specificity in product descriptions and improving technical details, such as ensuring a brand’s website loads within three minutes, which has become increasingly important as bots prioritise sites that load quickly.

Hannah Chelkowski, co-founder of Blank Ventures, a Refine investor, said retailers are seeing a rise of “semantic search” in AI chatbots, where users will look online in broader terms, for example, clothes for “a wedding in the south of France” instead of specific fashion items. This means product catalogues need to be “reorganised” to include text descriptions that match this style of searching.

Recent research from the University of Applied Sciences Upper Austria suggests that chatbots are exposed to and can be influenced by advertising on traditional websites, with a preference for text over images. This means that simpler forms of clear-text advertising may be better for brands seeking to appear within chatbot results.

Beyond influencing recommendations, Dimi Albers, chief executive at media agency Dept, said brands need to prepare for a world where transactions occur on chatbots, rather than their own websites.

“It will be very complex for most brands to move fast enough, not only to be visible, but also to understand that where you sell your goods is not going to be either on your platform, Amazon or retail, but in all the models that are popping up,” he added. “The agents are talking to each other instead of people necessarily doing some of those transactions.”

However, Inrupt, a start-up co-founded by World Wide Web creator Sir Tim Berners-Lee and John Bruce, aims to give control of personal data back to consumers, storing such information in a digital wallet that the individual can choose to grant access to agents and later remove.

Bruce cautioned that AI agents mark a move to a world where “shops and brands no longer count” and consumer choice could be limited as the system selects products for them, rather than showing all of the options.

“[Consumers] trade utility for privacy, freedom of operation and choice . . . Surrender a pair of shoes today and who knows what you are going to give up tomorrow?”

Bitcoin boom sees newly wealthy splurging on luxury travel

High end private jet and cruise companies accepting payment in cryptocurrency to tap into growth market

A growing number of private jet and ultra-luxury cruise operators are taking cryptocurrency payments amid booming demand from travellers made rich by soaring bitcoin prices.

“Tremendous” demand from young, wealthy customers has prompted Flexjet-owned FXAIR to accept crypto payments, Flexjet chair Kenn Ricci told the Financial Times.

FXAIR charges about $80,000 for a trip from Farnborough airport, near London, to New York City.

Ricci said Flexjet has had a “significant” rise in bookings in recent months from “young entrepreneurs in the bitcoin space [who] fly farther and want larger planes. We save them time . . . And time is the most precious luxury.”

Bitcoin hit a record high of $124,000 in recent weeks, boosted by US President Donald Trump’s support for the sector and vow to make America the world’s “crypto capital”.

Congress also passed landmark legislation, while Trump has appointed crypto-friendly regulators and backed several digital asset businesses.

As well as token prices, shares in companies such as exchange Coinbase and stablecoin operator Circle have reached record highs.

“Those who are seeing the value of their bitcoin grow rapidly are spending it on private jets or luxury hotels or luxury cruises,” said Paul Charles, chief executive of luxury travel consultancy PC Agency.

“There is a younger generation that’s grown up that is desperate to travel, to not be stuck with the humdrum and the usual.”

Luxury cruise company Virgin Voyages’ $120,000 annual pass can now be bought with crypto payments.

Meanwhile SeaDream Yacht Club, which operates two super-luxury yachts with a crew-to-guest ratio of almost 1:1, started accepting bitcoin payments shortly after Trump began his second term.

For some of the newly wealthy, luxury “is not about butlers with white gloves and golden mirrors, it is about freedom of choice”, said one person close to the yacht company. “If you want to pay in crypto we want to let you do that.”

Boutique hotel groups including US-based The Kessler Collection and Hong Kong-founded The Pavilions Hotels and Resorts also accept tokens including dogecoin, litecoin and ethereum.

Deep-pocketed young entrepreneurs have sparked a boom in the global luxury travel market.

People aged 30 to 40 spent $28bn on luxury travel in 2023, and are projected to spend $54bn in 2028, according to a McKinsey analysis.

Nick Fazioli, head of commercial aerospace and aviation at investment bank Jefferies, said the “younger crowds” do not want to “sip champagne and eat caviar”.

Bitcoin and tech entrepreneurs have “infinite resources, infinite money, infinite kinds of ambitions”. “The most important thing that is in short supply for them is time,” he said.

Private jets mean travellers “can be in three cities in one day and still come back to see your family at night”, Fazioli said. “Once you’ve got used to private travel it’s really hard to go back.”