Business News | Weak Domestic Demand May Limit China's AI-led Economic Gains: Fitch
Get latest articles and stories on Business at LatestLY. Artificial intelligence (AI) investment may not translate into broader economic gains for China in the near term, as weak domestic demand and limited monetisation constrain its impact despite expanding investments in technology and industrial applications, Fitch Ratings said.
New Delhi [India], October 27 (ANI): Artificial intelligence (AI) investment may not translate into broader economic gains for China in the near term, as weak domestic demand and limited monetisation constrain its impact despite expanding investments in technology and industrial applications, Fitch Ratings said.
In its report, Fitch said AI was becoming an increasingly important part of China's economic and credit outlook, with investment extending beyond semiconductors and computing infrastructure into automation, power generation, enterprise software and industrial applications.
Also Read | 'Jailer 2' Box Office Collection Day 12: Rajinikanth Starrer Crosses INR 730 Crore Worldwide!.
China is seeking new sources of growth beyond property, investment and credit expansion, but the wider benefits of AI, including higher productivity and stronger long-term growth, are likely to emerge gradually, the ratings agency said.
The report said China's policy focus was shifting towards integrating AI across industries, services, consumption and public-sector activities through the State Council's “AI+” initiative.
Also Read | iQOO Neo 12 Achieves 185 FPS Gaming Ahead of China Launch.
However, much of the current activity remains concentrated in infrastructure, hardware, automation and related supply chains, while monetisation across much of the value chain is still at an early stage.
Fitch said lower deployment costs and open-weight models could support wider adoption, but intense competition could limit companies' pricing power and their ability to generate returns from AI investments.
The agency's comparison of leading Chinese and US AI ecosystems also highlights differences in their commercial strengths. Chinese providers generally have advantages in deployment costs, open-weight model availability and appeal to cost-sensitive markets. US providers, meanwhile, are generally stronger in frontier model performance, global cloud infrastructure, enterprise penetration, pricing power and visibility over monetisation.
These differences could shape how companies in both markets convert technological advances into commercial gains.
Fitch also highlighted the imbalance in China's broader economy, where exports, industrial production and strategic investment continue to support activity, while household deleveraging, subdued confidence and weak private investment constrain momentum.
AI could reinforce this divide, with policy-supported and export-oriented sectors benefiting from investment while businesses exposed to weak domestic demand and property stress face more difficult credit conditions, the report said.
The key challenge for China will be to convert rising AI investment into productivity gains, stronger earnings and broader economic demand. The pace of adoption and companies' ability to monetise the technology will be important in determining whether AI can become a more durable driver of growth. (ANI)
(The above story is verified and authored by ANI staff, ANI is South Asia's leading multimedia news agency with over 100 bureaus in India, South Asia and across the globe. ANI brings the latest news on Politics and Current Affairs in India & around the World, Sports, Health, Fitness, Entertainment, & News. The views appearing in the above post do not reflect the opinions of LatestLY)