China Regulator Warns Tech Capital May Raise Traditional Firms' Borrowing Costs

A senior Chinese financial regulator warned Tuesday that investment flowing heavily into technology firms and market leaders may lift leverage and borrowing costs, tightening financing conditions for traditional businesses.

肖远企, deputy head of China's financial regulator, said concentrated capital could contribute to expansion that moves too quickly in favored sectors. He said the concentration may also make borrowing more expensive for traditional industries, add to their financial burdens and constrain their ability to reinvest or increase production.

肖远企 added that the shift could increase credit risk. He made the remarks at an investment summit for international financial leaders hosted by the Hong Kong Monetary Authority.

He urged policymakers to prepare a framework for economic changes driven by artificial intelligence. Advance planning, he said, would strengthen macroeconomic management and help guard against economic and financial risks.