Xiao Yuanqi, Deputy Administrator of China's National Financial Regulatory Administration (NFRA), warned that excessive concentration of AI-driven investment is squeezing financing space for traditional industries. Speaking at the fifth International Financial Leaders Investment Summit hosted by the Hong Kong Monetary Authority on November 3, Xiao said large amounts of capital flowing into the tech sector and leading companies are pushing up leverage levels and potentially leading to overly rapid expansion. The crowding-out effect raises borrowing costs for traditional firms, aggravates their financial burden, weakens their ability to reinvest and expand production, and increases credit risk, according to Xiao. He urged policymakers to formulate corresponding policy frameworks in advance for the AI-driven economic transformation to strengthen macroeconomic management and guard against economic and financial risks.