Hong Kong: China has warned that the growing concentration of global investment in artificial intelligence could create financial risks, increase borrowing costs and place additional pressure on traditional industries.
Xiao Yuanqi, deputy head of China's National Financial Regulatory Administration, raised the concerns on Tuesday during the Global Financial Leaders' Investment Summit in Hong Kong. He said the large flow of capital into technology companies and leading artificial intelligence firms was increasing leverage and encouraging rapid expansion.
Xiao warned that the concentration of investment could affect businesses beyond the technology sector. As more money flows towards artificial intelligence, traditional industries could face higher borrowing costs and greater financial pressure, making it harder for them to invest in production and expand their operations.
He also highlighted the possibility of increased credit risks as companies take on more debt to finance their expansion. He called for appropriate policy frameworks to address the economic and financial challenges created by the rapid development of artificial intelligence.
His remarks come amid a major global investment boom in artificial intelligence, with technology companies committing enormous amounts of money to develop computing infrastructure, data centres, advanced computer chips and other facilities needed to support AI systems.
A growing share of this expansion is being financed through borrowing rather than companies relying entirely on their existing cash resources.
A study published by the Bank for International Settlements on October 27 highlighted the increasing use of debt and complex financial arrangements to fund artificial intelligence infrastructure. It warned that banks could face greater exposure through loans to financing companies and investors involved in these arrangements.
The study also noted that the effects on financial markets had so far been limited and short lived. However, continued borrowing and large debt issues could create greater risks if investment continues to expand at the current pace.
The International Monetary Fund has also raised concerns about the financial consequences of the artificial intelligence investment boom. In its October 2026 Global Financial Stability Report, the IMF highlighted the possibility of a correction in AI related asset prices if investment or expected profits fail to meet market expectations.
The fund also warned that high levels of borrowing and concentrated financial exposure could increase the impact of a market downturn. However, it noted that global financial markets had remained resilient.
The scale of investment helps explain the growing attention from financial regulators. Stanford University's 2026 AI Index Report estimated that global corporate investment in artificial intelligence reached $581.69 billion in 2025, more than twice the previous year's level.
Private investment accounted for approximately $344.66 billion of the total, while mergers and acquisitions contributed around $214.44 billion.
The United States remained the largest destination for private AI investment, attracting approximately $285.9 billion in 2025. China recorded $12.4 billion in private investment during the same period. These figures do not capture all government supported investment, particularly in China.
China is also experiencing rapid growth in its domestic artificial intelligence industry. Figures from the China Academy of Information and Communications Technology showed that the country's AI industry exceeded 1.2 trillion yuan in 2025, representing an annual increase of 40 per cent.
Chinese official figures also showed that the country had more than 6,600 artificial intelligence companies as of June 2026.
Meanwhile, concerns about the financing of AI expansion are becoming increasingly visible in international bond markets. Some major American technology companies are seeking additional financing through European bond markets to support their artificial intelligence infrastructure investments.
This growing demand for financing could increase competition for investment capital, potentially affecting other companies and governments seeking to raise money through bond markets.
Financial analysts have also raised questions about whether future revenues from large AI infrastructure projects will justify the scale of investment and borrowing.
However, the concerns do not mean that the global AI industry is facing an immediate financial crisis. Major technology companies continue to invest heavily in the sector, while demand for computing infrastructure and AI services remains an important part of the global technology market.
Xiao's warning highlights the need to balance technological development with financial stability. As investment in artificial intelligence continues to expand, policymakers face the challenge of ensuring that funding reaches different sectors of the economy without creating excessive debt or increasing financial vulnerabilities.
The growing debate is therefore not only about how much money is being invested in artificial intelligence, but also about how that investment is financed and whether its benefits can support sustainable economic growth across different industries.