Morgan Stanley Asia CEO Says China's AI Ecosystem Could Add $3-4 Trillion in Incremental Market Value

Gokul Laroia, Chief Executive Officer of Morgan Stanley Asia and Global Co-Head of Equities, recently said that artificial intelligence is driving growing global investor interest in China's market. He described China as the only market other than the United States with an independent and comprehensive AI ecosystem, which could generate US$3-4 trillion in incremental market value.

Laroia said global AI investment has risen to roughly US$1 trillion to US$1.5 trillion a year, mainly in the U.S. but increasingly in China and other regions. He noted that the AI supply chain is largely rooted in the Asia-Pacific region, with a significant portion in China, making Chinese AI investment crucial to the current wave of AI. The capital currently flowing into China remains a small fraction of what is actually needed, he added. China's AI ecosystem spans semiconductor localization, data centers, cloud service providers, large language models, and digital and physical AI applications, with hundreds of companies involved in innovation.

Laroia also said that amid geopolitical considerations, AI and AI infrastructure, energy, energy transition, and defense have become increasingly important, and China can meet these investment needs, raising the investment value of Chinese companies.

On China's financial opening, he made three suggestions: further institutionalize the market to raise the share of institutional investors; offer a broader range of products for global investors, including single-stock hedging tools and actively managed ETFs; and reduce frictions in market participation while maintaining regulatory transparency, consistency, and consultation processes.