AI investment is becoming overly concentrated, Chinese official says

Global investment in artificial intelligence is "overly concentrated" and crowding out traditional industries by raising borrowing costs, a top official at China's financial regulator said on Tuesday.

"A massive influx of capital into the technology sector and leading firms has driven up leverage levels within these areas—potentially fueling excessively rapid expansion," said Xiao Yuanqi, the vice head of the China National Financial Regulatory Administration while at the Hong Kong Monetary Authority's Global Financial Leaders' Summit.

"This concentration of capital creates a crowding-out effect on traditional industries ... it raises borrowing costs and increases the financial burden on these firms, thereby weakening their capacity for reinvestment and expanded production, while simultaneously heightening credit risks.

"Policymakers should prepare policy frameworks specifically addressing this AI-driven transformation, in terms of macroeconomic management and the prevention of economic and financial risks."

Reuters

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