China’s push to develop artificial intelligence (AI) is expected to benefit regions best equipped to support AI infrastructure and related services, while other parts of the country may have to wait for wider economic spillovers, S&P Global Ratings said on Thursday.

According to the rating agency, China is banking on its AI ambitions triggering a virtuous cycle. For now, benefits will reach the places best equipped to host firms building out related infrastructure and services. The rest of the country will have to hope and wait for second-order effects.

“Beijing, Shanghai, Shenzhen, and Hangzhou stand to gain the most from the AI build-out, in our view,” said Wenyin Huang, a credit analyst at S&P Global Ratings. “They have top research talent, established engineering bases, and deep capital pools.”

Another two dozen or so cities are also on the value chain. Each will take something from the build-out. “We expect economic effects to arrive sooner than government revenues,” Huang said.

AI will be a long-term priority for China, in her view. The State Council’s “AI+” opinion of August 2025 envisaged the co-development of chips, computing, cloud, and models, with targets for the next decade.

Those on the value chain are businesses involved in skilled manufacturing, talent and intellectual property, and capital-heavy operations, with each impacting the economies and tax gains for local governments differently.

“We see risks as some investments will sour.”Some regions are less equipped to capitalize on the build-out,” said S&P Global Ratings credit analyst Christopher Yip. “Returns from investments made by these vehicles, whether capital gains or tax, are set to arrive only years after.”

Huang added that a K-shaped economy could take shape. “By that we mean some regions will grow while others will find it more challenging to leverage this technological transformation. Many areas that fear missing out are chasing a limited number of industries with funds raised through debt.”

If AI spending wanes, only some Asia-Pacific tech firms would be resilient – S&P