China's advanced manufacturing sector is poised to benefit significantly from a surge in artificial intelligence (AI) spending, according to the Bank of Singapore (BOS). The bank forecasts a robust growth rate of over 20% in AI-related capital expenditures by leading Chinese technology firms over the next few years.
Sector Growth
BOS identified several sectors that stand to gain from this trend, including electric vehicles, solar equipment, industrial machinery, and robotics. The bank noted that electrical machinery and equipment accounted for half of China's 14.5% year-on-year export growth in the first quarter of 2026. This growth is attributed to the increasing demand for electrical integrated circuits, which are essential for AI infrastructure.
Jean Chia, global chief investment officer at BOS, stated,
China is one of the biggest beneficiaries of AI capex,
during the BOS Portfolio Summit. The bank's 2026 Supertrends report indicated that the impact of AI will extend beyond technology firms and manufacturers, enhancing productivity and competitiveness across China's entire supply chain.
Market Dynamics
Despite the expected growth, BOS cautioned that the benefits of the industrial up-cycle may not be evenly reflected in Chinese equities. The bank suggested that onshore A-shares could offer better returns compared to offshore markets. Chia remarked,
China is really a tale of two markets, in terms of the domestic (market) as well as the offshore (markets).
Increased spending in AI-related sectors could lead to higher demand for electrical machinery and equipment, positively impacting companies within these industries. Investors may closely monitor the performance of onshore A-shares versus offshore stocks as the AI cycle unfolds. Watch for further insights from BOS's upcoming reports on sector performance and investment strategies in the coming months.