AI Risks Deepening China's Supply-Demand Imbalance: PBOC Adviser

The wider deployment of artificial intelligence (AI) and accelerated technological innovation could deepen and prolong China's structural economic imbalance of "strong supply and weak demand," warned Huang Yiping, a member of the People's Bank of China's (PBOC) monetary policy committee. Speaking at an economic forum in Beijing on Saturday, Huang called for policy measures that bolster domestic consumption and repair balance sheets across the national economy.

Chinese policymakers have been striving to revive domestic demand against the backdrop of a prolonged property downturn, local government debt pressures, and cautious household spending. While a global AI boom has buoyed China's exports this year and cushioned the impact of sluggish domestic demand, Huang noted that the contradiction between aggregate supply and demand may persist for an extended period.

Trading partners, including the United States, have repeatedly urged Beijing to rebalance its economy away from an export-reliant model toward consumer spending, arguing that industrial overcapacity is swamping foreign markets with low-cost goods.

To address these challenges, Huang urged Beijing to advance market-oriented reforms that allow market forces a greater role in resource allocation while increasing the household income share of the broader economy. He also suggested expanding overseas investment and industrial cooperation rather than relying solely on direct exports. Furthermore, Huang proposed that the central government leverage its own balance sheet by increasing borrowing to relieve local governments, financial institutions, and corporations of debt burdens, thereby restoring their capacity to engage in new economic activity.
//DBTech/Ruters/NAP/BPO//