WORLDTECHChina regulator warns AI investment is crowding out traditional industries
What happened
He added that this borrowing could be fueling expansion that moves excessively fast.
The AI investment surge risks destabilizing traditional sectors, raising borrowing costs and credit risks, necessitating regulatory intervention. Xiao Yuanqi, vice head of the National Financial Regulatory Administration (NFRA), said on Tuesday, November 3, that global capital flowing into artificial intelligence has become excessively concentrated.
In his view, it is squeezing traditional industries by driving up what they pay to borrow. What Xiao actually said Xiao made the remarks at the Hong Kong Monetary Authority’s Global Financial Leaders’ Investment Summit.
His central argument was about leverage, meaning borrowed money used to fund growth. “A massive influx of capital into the technology sector and leading firms has driven up leverage levels within these areas,” Xiao said.
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Create a free account The second half of his warning concerns everyone outside the AI spotlight. When capital rushes toward tech and its biggest players, traditional companies face higher borrowing costs.