China Spends Big on AI but Economy Lags

According to reporting by Li Yuan in The New York Times, Beijing is pouring massive resources into closing the artificial intelligence gap with the United States—channeling hundreds of billions of dollars into data centers, tax breaks, and state-backed tech funds—even as China's broader domestic economy suffers its worst slump in decades. While Xi Jinping views cutting-edge tech and national "hard power" as the primary metrics of progress rather than standard GDP growth, prominent Chinese economists are sounding the alarm that this state-driven push creates relatively few jobs while the country wrestles with an 18.9 percent youth unemployment rate, sharp declines in car and housing sales, and a deepening deflationary spiral. Rather than stimulating household disposable income or expanding social safety nets to revive consumer spending, the government is steering capital away from the broader populace, sparking warnings from domestic experts and comparisons to both Mao's disastrous Great Leap Forward and the Soviet Union's stagnation—raising the critical question of whether an advanced AI sector can ever become commercially viable when the everyday domestic market is left too broken to afford it.