(Yicai) June 16 -- The world has entered a peak period for artificial intelligence investment. While AI does contribute to China's economic growth, it is not advisable to overestimate its impact at this stage, according to the chief China economist at Nomura Holdings.

AI is revolutionary and has already had a significant impact on the global macroeconomy, Lu Ting said at a recent media event. It is reshaping the global supply chain, as a core AI industry chain cluster -- the United States + Taiwan + South Korea + Japan -- has emerged worldwide. The development of AI storage chips has created a super cycle, attracting international capital to Taiwan and South Korea.

Moreover, AI is accelerating regional economic differentiation and the reorganization of global supply chains, which is reflected in the fact that the US is becoming increasingly close to certain East Asian economies due to industrial complementarity, Li noted. For example, the US shipbuilding industry heavily relies on South Korea for capacity, high-end technology transfer, and short-term maintenance support.

About the Chinese market, Lu believes that AI has a driving effect on China's economic growth.

In May, China's exports increased 19 percent from a year earlier, accelerating from 14 percent in April, with technological products and new energy vehicles remaining the core driving factors, according to the latest official data. Exports of high-tech products surged 51 percent in the period, making a great contribution to the overall growth.

AI contributed to half of China's 19 percent expert growth, but it was primarily driven by price input, Lu clarified.

In his view, China has unique advantages in developing AI technology. "AI is particularly energy-intensive, and China's electricity generation is 2.4 times that of the US," he pointed out. "China's investment in electricity also far exceeds that of the US, which is one of our important advantages in developing AI."

China's electricity generation exceeded 10 trillion kilowatt-hours last year, while that of the US was just over 4.3 trillion kWh.

In addition, China has great advantages in areas such as 'AI + manufacturing,’ including humanoid robots and AI drones, according to Lu. The nation's AI application penetration rate ranks among the top in the world.

However, Lu cautioned that the impact of AI on economic development at this stage should not be overrated.

Can AI uplift the entire macro economy? Can it offset the impacts of low inflation, low interest rates, and the deep adjustments in the real estate sector on the economy? He does not think so.

AI has, to some extent, exacerbated two types of K-shaped trends, one among people and the other among cities, Lu said.

First, AI is further replacing ordinary white-collar workers and flexible employment positions, leading to a concentration of wealth among capital owners and high-skilled individuals. Second, the high entry barriers for AI have led to the concentration of large language models and chip design and manufacturing in four cities: Beijing, Shanghai, Hangzhou, and Shenzhen.

'‌‌‌‌K-shaped' is used in economics to refer to a pattern where different groups have vastly different outcomes; some experience growth, while others decline, creating a polarized environment.

"Overall, the population of these cities -- Beijing, Shanghai, Hangzhou, and Shenzhen -- accounts for no more than 7 percent of the national total," Lu noted. AI will not distribute its benefits evenly like traditional industries. Instead, leading cities will steal lower-tier cities' jobs to expand their own profits, widening the regional gap.

To address this K-shaped trend, China should establish mechanisms for data pricing, payments, and tax adjustments to balance the distribution of benefits among different cities, Lu believes.

Moreover, in conjunction with the wave of AI development, there should be increased investment in projects, such as Eastern Data Western Computing, data centers, and power infrastructure, he suggested.

Editor: Futura Costaglione