Name: How AI is Transforming China's Economy
Uploaded: 2026-09-15T05:12:17+00:00
Duration: 795 s

Speakers

Yanliang Miao — CICC Chief Economist and former China State Administration of Foreign Exchange (SAFE) official

Summary

Yanliang Miao, CICC Chief Economist and former SAFE official, discusses China's August activity data and argues the economy is undergoing a structural transition with AI as a new growth engine. He expects fiscal stimulus and bond issuance to support the growth target, sees AI-driven productivity in non-tradable services capping yuan appreciation, and highlights a shift in China's export-windfall recycling through Hong Kong and outward FDI. He also addresses AI's deflationary impact, capital intensity, and labor-market disruption.

China's August data came in below expectations amid a structural transition.
AI is viewed as a new growth engine, accounting for 45% of export growth in the first eight months.
Fiscal stimulus and roughly 5 trillion yuan of new bond issuance are expected to help meet the 4.25-4.75% growth target.
AI productivity gains in non-tradable services add deflationary pressure and cap yuan appreciation.
China's export surplus recycling has shifted from central-bank reserve recycling toward corporate/household flows via Hong Kong and outward FDI.
AI is capital intensive, requiring data centers, cooling, and energy; both equity and fixed-income financing can play a role.
AI task displacement is concentrated in junior roles like coding, accounting, and law, but aggregate job losses remain limited.

Ideas

Yanliang Miao CICC Chief Economist and former China State Administration of Foreign Exchange (SAFE) official 0:18

China leads AI adoption growth engine.

AI is emerging as China's new growth engine. China leads in AI adoption because of broad real-world use cases and a large user base, cost-efficient open-source models, and infrastructure and energy capacity. AI already accounted for 45% of Chinese export growth in the first eight months and is shifting from export gains into domestic investment, changing the economy's inputs and the relationship between financial markets and real investment.

Yanliang Miao CICC Chief Economist and former China State Administration of Foreign Exchange (SAFE) official 5:50

AI buildout needs power and infrastructure.

AI is capital intensive and changes the economy's resource inputs. It requires large data centers, cooling centers, and energy, making both chips and electricity important again. This creates an AI infrastructure buildout that can be financed through both equity/risky investment and fixed income markets.

Yanliang Miao CICC Chief Economist and former China State Administration of Foreign Exchange (SAFE) official 8:49

Hong Kong key Chinese capital conduit.

China's external surplus recycling has fundamentally shifted. Previously the central bank recycled export income into reserves and U.S. Treasuries; now Chinese companies and households bring foreign income onshore and then redeploy it abroad through channels such as Hong Kong Connect into the Hong Kong market or through outward FDI. This makes Hong Kong a key conduit for Chinese capital recycling.

Yanliang Miao CICC Chief Economist and former China State Administration of Foreign Exchange (SAFE) official 9:09

Yuan appreciation capped by AI deflation.

He disagrees with calls for rapid, large yuan appreciation. AI productivity gains are concentrated in non-tradable services such as healthcare, education, and delivery, where they lower domestic costs and prices and add deflationary pressure. With non-tradable productivity growing faster than tradable productivity, China's equilibrium exchange rate is pushed lower, capping yuan appreciation.

How AI is Transforming China's Economy

Summary

Ideas

Up Next