How a slowdown in US AI capex might impact China's economy
FXI•Capital Economics expects US AI investment growth to pull back in 2027 and turn negative in 2028, reducing US imports of computers and peripheral equipment by an estimated 25%. Weaker demand for China’s AI-related exports could shave 0.2 percentage points off its GDP growth in 2027 and 0.3 percentage points in 2028.
1. Export growth at risk
Capital Economics expects US AI investment growth to pull back in 2027 and turn negative in 2028, a shift it estimates will translate into a 25% drop in US imports of computers and peripheral equipment. The firm said weaker foreign demand for AI-related goods could knock 1.6 percentage points off China’s total real export growth in 2027, compared with a scenario in which total and AI-related exports continue growing at their average quarterly pace of the past two years. It estimates the drag will rise to 3.1 percentage points in 2028.
2. Limited GDP impact
Capital Economics expects demand for non-AI products to keep China’s real exports growing at a healthy pace, though the growth rate would be dented. It estimates weaker demand for China’s AI-related exports could shave around 0.2 percentage points off GDP growth in 2027 and 0.3 percentage points in 2028, partly because China’s electronics sector relies more on imported content than most other industries. The firm said a more severe AI bust could have a more dramatic impact.
