Former People's Bank of China (PBOC) Governor Zhou Xiaochuan said on October 20 that artificial intelligence (AI) applications could drive productivity growth, while warning that massive investment in AI infrastructure could pose risks to financial stability.

Speaking at the 2026 Bund Summit, Zhou said the rapid evolution of AI and the uncertainties surrounding its development made it difficult to predict the pace and scale of AI-driven productivity gains.

The summit, themed "Technology, Geopolitics and the Global Economy," is jointly hosted by the China Finance 40 Forum and Tsinghua University at Shanghai from October 19 to 22.

Zhou identified three major areas of AI-related investment. The first is large models and the computing power and data centers needed to train them. The second is AI applications. The third is supporting industries, including semiconductors, electricity and liquid cooling. He said the application layer would be the main source of productivity gains, highlighting lightweight models as a promising technology. Such models could bring AI capabilities to cars, laptops and smartphones, potentially expanding the technology's practical applications.

Zhou also pointed to advances in large models, memory chips and large-scale simulation models as important technological developments. However, he questioned how heavily future AI models and applications would depend on data center computing capacity, given the substantial investment flowing into data center construction.

On international cooperation, Zhou said AI's far-reaching impact on the global economy and society made coordinated efforts necessary, although its rapid development posed challenges for governments seeking to establish governance frameworks. He identified three priorities for cooperation. These are controlling military applications of AI, combating hacking and fraud, and protecting personal privacy in data use. Broader implications for employment, income distribution and social structures required further study, he added.

Zhou also called for price mechanisms to play a greater role in helping economies adjust to shifts in global supply and demand and industrial structures, rather than relying excessively on administrative measures.

Meanwhile, he warned that failed investments in AI and related infrastructure could trigger financial turbulence or even a crisis, given the enormous sums flowing into the sector. He urged policymakers to conduct research and prepare contingency measures to support the economy and assist financial institutions in the event of major market disruptions.