China Central Bank Adviser Warns AI Could Worsen Supply-Demand Imbalance

Artificial intelligence could deepen and prolong the imbalance between strong supply and weak consumer demand in China, according to Huang Yiping, a professor at Peking University and a policy adviser to the People’s Bank of China.

Speaking at an economic forum in Beijing on Saturday, Huang said the rapid deployment of AI and accelerating technological innovation could further increase production capacity while demand remains weak.

“As AI is deployed more widely and innovation accelerates, the imbalance between strong supply and weak demand could worsen,” Huang said.

He added that the gap between total demand and supply may persist for some time, despite efforts by Chinese policymakers to revive domestic consumption.

China’s economy has been facing pressure from a prolonged property downturn, local government debt and cautious household spending. Meanwhile, the global AI boom has helped support Chinese exports, providing some relief from weak domestic demand.

Huang said China should strengthen consumption by giving markets a greater role in allocating resources and increasing the share of household income in the economy.

He also suggested that Beijing consider expanding overseas investment and industrial cooperation rather than relying heavily on exports.

The economist further called for increased central government borrowing to help repair the balance sheets of local governments, financial institutions and companies. He said restoring their ability to undertake new economic activity would make economic stimulus measures more effective.

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