China pushes AI‑driven reforms to narrow K‑shaped economic divide

China’s economy this year has shown a pattern of “new‑strong, old‑weak” growth, with high‑tech and machinery sectors outpacing traditional industries. Policymakers say artificial intelligence (AI) is a key driver of this K‑shaped divergence, boosting productivity for leading firms while threatening wider employment and wealth distribution.

To harness AI benefits and mitigate social strain, the National Development and Reform Commission has earmarked 800 billion yuan for 1,417 major projects, completing the rollout of the “two‑track” construction plan for the second half of the year. The People’s Bank of China conducted a 10 trillion‑yuan, three‑month reverse‑repo operation and injected an additional 70 billion yuan of seven‑day repos, signalling strong liquidity support. Authorities also retain policy space for broader rate cuts and increased fiscal spending to stabilise investment and consumption.

Commentators urge institutional innovation: expanding vocational training, linking productivity gains to broader income sharing mechanisms, and strengthening universal social‑security coverage to protect workers displaced by AI. The aim is to ensure that AI‑driven efficiency gains translate into inclusive, high‑quality growth for the whole economy.