Goldman Sachs analysts have revised their outlook on China’s AI-driven economic growth, forecasting a faster adoption rate and a greater impact on GDP than previously expected.
In a recent research note, the bank projects that AI will contribute a 0.2-0.3 percentage point (pp) uplift to China’s annual GDP growth by 2030, up from an earlier estimate of 0.1pp.
Analysts highlighted that while AI's automation potential is more significant in advanced economies like the U.S., where service industries dominate, China’s workforce composition—where 50% of jobs are in agriculture, manufacturing, and construction—limits AI's immediate productivity gains.
As a result, Goldman Sachs has slightly lowered its long-term AI-induced productivity boost for China from 9% to 8%.
However, the rapid development of Chinese AI models, including the emergence of DeepSeek as a global competitor, suggests accelerated AI adoption, analysts wrote.
Analysts now expect China to integrate AI into production processes faster, mirroring adoption patterns in developed markets. They anticipate that AI-related capital expenditures in China will rise sharply between 2025 and 2027, with total AI-related spending approaching 1% of GDP by the end of the decade.
While AI presents economic opportunities, Goldman Sachs warns of potential disruptions to China’s labor market, particularly in low-skilled service jobs. Nonetheless, AI-driven automation could help offset China’s declining working-age population over the long term, the brokerage said.
"While we see AI as raising growth upside, we also see it as highlighting challenges for the already soft Chinese labor market, particularly if a large number of workers in low-skilled service occupations are displaced due to AI adoption," analysts wrote.
Goldman Sachs has not adjusted its overall China GDP forecast, citing uncertainties in AI’s future trajectory. However, analysts note that a more frontloaded AI investment cycle could provide further upside to growth projections.
Source : Investing.com