What Xi Jinping Fears: Electric Cars and AI, and Deflation Fear

Federico Rampini / CorriereTv

Federico Rampini analyzes the recent concerns expressed by Chinese leader Xi Jinping, which surprisingly focus on two sectors traditionally considered the country's strengths : electric cars and artificial intelligence. Xi Jinping has criticized the excessive price cuts for electric cars , which are intended to undermine foreign competitors (such as Tesla) as well as other Chinese companies. The price war could lead many Chinese companies to sell at a loss, prompting them to request further government subsidies. This phenomenon accentuates deflation, considered one of the ills of the Chinese economy and an indicator of weak domestic demand. Furthermore, excessive investment in artificial intelligence could lead to overproduction and overcrowding in the sector.