On November 6, 2026, the Democratic Party in the United States made a significant comeback during the midterm elections, creating a so-called “blue tsunami.” This unexpected victory has raised concerns in the market about the potential for the Democrats to implement stricter regulations and limitations on artificial intelligence (AI). Such moves could slow down the construction of AI infrastructure and perhaps even diminish America’s competitive edge in the global AI race.
Bloomberg Economics has recently issued a warning that while a slowdown in AI investments might relieve some competitive pressure from China, it may paradoxically lead to a decrease in demand for AI-related component exports from China, ultimately impacting the country’s economic growth.
Leading a team on this topic, Chang Shu, the chief economist for Bloomberg Economics in the Asia-Pacific region, delivered a report indicating that a reduction in American demand could result in an oversupply of AI-related components exported by China. This situation could “undermine China’s economic growth model, which heavily relies on the AI industry as a significant driving force.”
The report further analyzes that in recent years, American tech companies have significantly invested in AI development, stimulating the construction of essential infrastructures such as data centers, servers, semiconductors, and power equipment. This boom has also created export opportunities for Chinese manufacturers of related components. However, if the U.S. slows down its construction of computing infrastructure due to shifts in the political and policy environment, the demand for procurement of related equipment and components may subsequently decline.
According to Reuters, following the Democratic takeover of Congress in January 2027, the party is planning to introduce a series of AI regulatory bills. These include measures to prevent data centers from driving up residential electricity costs, mandates for independent testing of advanced AI systems, and clearer legal responsibilities for AI companies regarding damages caused by their products.
Previously, Goldman Sachs estimated that the Democratic victories in state and local elections might put approximately 45% of the planned new capacity for data centers at risk of being paused or delayed.
For Beijing, a slowdown in American AI investment might appear to present a strategic opportunity. However, Bloomberg Economics argues that this geopolitical potential benefit does not necessarily offset the economic losses stemming from reduced export demand.
If overseas orders decline, Chinese manufacturers specializing in AI-related components will likely face pressures relating to increased inventory, decreased capacity utilization, and intensified price competition, which could further disrupt both upstream and downstream supply chains.
At the same time, Asian technology stocks have recently been affected by market anxieties regarding the future of the AI industry, prompting investors to reassess the sustainability of the AI investment boom.
Bloomberg analysts suggest that countries like South Korea and Taiwan, which are crucial suppliers of high-end chips and memory products, will face significant demand risks. Additionally, the electronic hardware exports and data center construction activities of Singapore and Malaysia may also be impacted by these developments.