BEIJING, Sept 19 (Reuters) – Artificial intelligence could deepen and prolong China’s strong supply and weak demand imbalance, a central bank adviser said on Saturday, adding to calls for policies that bolster consumption and repair balance sheets across the economy.
China’s policymakers have been trying to revive domestic demand amid a prolonged property downturn, local government debt pressures and cautious household spending. A global AI boom has helped support China’s exports this year, cushioning the economy against weak domestic demand.
“As AI is deployed more widely and innovation accelerates, the imbalance between strong supply and weak demand could worsen,” said Huang Yiping, a member of the People’s Bank of China’s monetary policy committee, at an economic forum held in Beijing.
“The contradiction between total demand and total supply may not disappear quickly in the short term, and may even persist for some time,” he added.
The United States and some trading partners have urged Beijing to rebalance its economy towards consumption and away from a reliance on exports, arguing that excess industrial capacity is flooding overseas markets with cheap Chinese goods.
China should further advance market-oriented reforms, allowing markets a greater role in allocating resources and helping increase the share of household income in the economy, Huang said, adding that Beijing should also consider deeper overseas investment and industrial cooperation, rather than relying solely on exports.
Huang proposed that the central government increase borrowing to help repair the balance sheets of local governments, financial institutions and companies.
“Without restoring the capacity of these entities to undertake new economic activity, stimulus policies would have limited effect,” Huang said.
(Reporting by Ellen Zhang and Engen Tham; Additional reporting by Shuyan Wang and Liangping Gao; Editing by Tom Hogue, Kirsten Donovan)
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