China Financial Regulator Warns AI Investment Crowds Out Industry
Xiao Yuanqi warns that concentrated capital influx into artificial intelligence is raising borrowing costs and increasing financial risks for traditional industries.
The vice head of the China National Financial Regulatory Administration, Xiao Yuanqi, warned on November 3 that global investment in artificial intelligence has become overly concentrated. Speaking at the Hong Kong Monetary Authority’s Global Financial Leaders’ Summit, Xiao stated that the massive influx of capital into the technology sector is crowding out traditional industries by raising borrowing costs and increasing financial burdens on those firms.
Xiao argued that this trend weakens the capacity for reinvestment and expanded production while heightening credit risks. He noted that the concentration of capital in leading firms has driven up leverage levels, which could fuel excessively rapid expansion.
To mitigate these threats, Xiao called on policymakers to develop specific policy frameworks for macroeconomic management. He emphasized the need for these frameworks to address the AI-driven transformation and prevent potential economic and financial risks.
