China’s artificial intelligence (AI) sector has emerged as a significant driver amid the country’s recent economic slowdown, providing a crucial source of growth during one of its weakest periods in years. Data from the April-June quarter indicate that electronics and information technology industries contributed more than half of the quarter-on-quarter economic expansion, highlighting AI-related activities as a leading force behind the recovery.
According to analysis by Capital Economics, AI-related exports accounted for approximately 1.1 percentage points of nominal GDP growth during the first four months of the year, nearly tripling their contribution compared with 2025. Despite this boost, economists caution that AI-driven growth alone may not be sufficient to offset broader structural challenges facing China’s economy. Julian Evans-Pritchard of Capital Economics noted that while AI could serve as a resilient growth engine into 2027, the economy remains vulnerable if investment in AI infrastructure slows.
The rapid development of AI has coincided with a significant global increase in spending on data center infrastructure. In the United States, hundreds of billions of dollars have been invested in AI-related hardware, with about a quarter of that expenditure directed offshore, benefiting manufacturing hubs across Asia, including China. This dynamic has intensified demand for components produced in China, reinforcing the country’s position as a key player in the global AI supply chain.
Domestically, China is witnessing the expansion of a comprehensive AI value chain, encompassing power generation, semiconductor production, data center equipment, AI software, and AI-driven applications such as autonomous vehicles. Goldman Sachs analysts identified over 3,000 Chinese companies embedded in this ecosystem, contributing to 16 percent of global AI-related revenues. Liu Qiao, a finance professor at Peking University who advises the government, stated that AI-related investments now constitute about 17 percent of China’s GDP.
The growth of AI contrasts with persistent weakness in other sectors, particularly construction, which continues to drag on economic performance amid declines in housing prices. Bloomberg Economics estimates that high-tech and green industries could represent approximately 20 percent of GDP this year, potentially surpassing the property sector for the first time.
China’s leadership has prioritized AI as a strategic sector, with President Xi Jinping actively promoting efforts to shape global AI governance through a coalition of nearly 30 countries. The technology’s rapid ascent has propelled it to the forefront of policy discussions, as China aims to assert influence over the evolving international AI landscape.
Comparatively, the United States has seen AI spending directly stimulate its domestic economy primarily through capital expenditures in data centers, accounting for a notable share of recent GDP growth. Meanwhile, China’s AI-driven growth also extends into its broader industrial base, reflecting a more diverse integration of AI technologies across multiple sectors.
As the global race to develop AI capabilities intensifies, China’s expanding AI infrastructure and growing industrial ecosystem position it as a central player in the ongoing technological transformation, even as economic uncertainties persist.