Huang Yiping says AI could deepen China’s supply-demand imbalance

Huang Yiping, a Peking University professor and member of the People’s Bank of China’s Monetary Policy Committee, said at an economic forum in Beijing that artificial intelligence could deepen and prolong China’s imbalance of strong supply and weak demand. He said broader AI deployment and faster innovation may worsen the mismatch between aggregate supply and aggregate demand, and that the contradiction is unlikely to fade quickly in the near term. Huang called for more market-oriented reform so the market can play a larger role in resource allocation, along with a higher share of household income in the economy. He also said China should consider deeper overseas investment and industrial cooperation instead of relying only on exports. In addition, Huang suggested the central government increase borrowing to help repair the balance sheets of local governments, financial institutions, and companies, warning that stimulus measures would have limited effect if those entities cannot regain the capacity to undertake new economic activity.