Beijing – China has signaled it will curb excessive competition in the booming artificial intelligence sector, urging provinces to pursue coordinated growth rather than duplicate investments. The move reflects Beijing’s effort to strengthen AI as a key economic pillar while avoiding the pitfalls seen in other industries such as electric vehicles.
Coordinated Strategy for AI
Zhang Kailin of the National Development and Reform Commission (NDRC) said the government would encourage regions to focus on their unique strengths. “We will resolutely avoid disorderly competition or a ‘follow-the-crowd’ approach,” Zhang told reporters, stressing that development should align with local resources and industrial foundations.
The comments expand on an action plan released earlier in the week aimed at accelerating AI growth in a balanced way. President Xi Jinping recently warned against unchecked local government spending in AI, reflecting concerns about overcapacity and wasteful investments.
Implications for Industry
While the NDRC did not specify which areas face overheating, global attention has centered on the massive investments in AI datacenters. Such projects drive demand for chips, servers, and networking equipment from companies like Huawei, Lenovo, and Cambricon Technologies.
Cambricon’s shares plunged 11% on Friday after cautioning investors about a sharp surge in its stock price. The warning came amid a broader $1 trillion rally in Chinese tech markets, driven by investor enthusiasm for AI.
Push for Balanced Growth
Despite its caution, Beijing continues to view AI as a strategic growth driver and critical front in competition with the US. The NDRC said it would strengthen national-level planning, support private firms, and nurture more “dark horses”—a likely reference to startups such as DeepSeek, which recently gained international prominence with a cost-effective AI model.
Bloomberg data suggests Chinese firms plan to install more than 115,000 Nvidia AI chips in new data centers across the country’s western regions, underscoring the scale of the sector’s expansion.
Broader Economic Measures
Alongside AI, the government is also seeking to attract more private investment into traditional infrastructure projects, including railways, nuclear power, and oil pipelines. The NDRC announced a minimum private shareholding requirement for such ventures.
Officials are also weighing higher central government spending on social projects like pre-school education and childcare to relieve debt-burdened local governments and boost long-term consumption.
Source: Bloomberg
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