AI in action · Regulation
China's Central Bank Will Watch AI's Grip on Stock Markets
PBOC governor Pan Gongsheng said the AI investment wave now drives global stock gains and makes markets more correlated and volatile. The bank will assess AI's effect on monetary policy in advance.
Most central bankers who talk about AI start with productivity. Pan Gongsheng, governor of the People's Bank of China, started with stock markets. Opening the 2026 Financial Street Forum in Beijing on October 19, he said the AI investment wave had become one of the main forces behind global equity gains and that markets were showing elevated correlation and volatility, according to CGTN and Bloomberg.
Pan listed three features of the AI boom that deserve a central bank's attention: a possible timing mismatch between AI demand and the supply being built for it, effects that are uneven across countries and sectors, and the technology's role in driving highly correlated and volatile equity markets. The first is the question behind much of this autumn's selling in AI shares; the third means a shock in one part of the trade can travel quickly to the rest.
On the economy, he described a two-stage effect. In the short run AI could raise efficiency, spur investment and push inflation up; over the long run it may lift productivity and bring inflation down. AI has not yet caused a clear shock to total employment, he said, though it is already changing the structure of jobs. The PBOC will "cautiously assess the impact of AI technology evolution on the macroeconomy, financial markets and monetary policy" and prepare policy options in advance.
The bank's approach has three parts: finance the industry's growth, with more and more varied support for core technology and the government's "AI+" initiative; adopt AI in financial operations with caution; and monitor closely how it reshapes the economy and markets. Pan said AI is already used in Chinese finance to detect suspicious transactions, improve risk control and widen access to financial services.
Nine days later his observation reads like a forecast. A Goldman Sachs note this week found that exposure to chip stocks explained about 54% of the differences in performance across assets over three weeks. A central bank that both finances an industry and watches the bubble risk around it has set itself a delicate task, and Pan did not say which signal would tip the balance.
Sources: CGTN — Chinese central bank to employ 3-part AI strategy, says governor (Oct 20, 2026); Bloomberg — PBOC's Pan Says to Monitor AI Impact on Economy, Monetary Policy (Oct 19, 2026); Business Insider via Yahoo Finance UK — The AI trade is driving global markets more than oil, Goldman Sachs says (Oct 27, 2026)