CICC: Global Economic Imbalances Near 20-Year High, AI Is the Core Driver
N.R. Finch
CICC's latest research report finds that global current-account imbalances have climbed to a near-20-year high, with the AI boom amplifying the gap from both the real-trade and financial-allocation sides — making it the central variable for reading today's global economy.
What does "global imbalance" actually mean?
The current account — the running total of a country's trade and income flows with the rest of the world — narrowed steadily for about a decade after the 2008 financial crisis. Since 2020, it has widened again and now sits at its highest level in nearly 20 years.
This means → the global scales of "who earns more, who spends more" have tilted sharply once more, moving to the centre of both market and policy debate.
How is this round different from the last one?
CICC identifies three structural shifts. First, the main driver of America's spending-exceeds-earning gap has moved from household leverage (pre-subprime) to government borrowing. Bilateral tariffs may reshuffle which countries hold the surplus, but they are unlikely to shrink the overall deficit.
Second, the goods at the heart of the trade gap have shifted from low-end consumer products to mid-to-high-end manufactured goods — think semiconductor equipment and servers, not cheap daily necessities.
Third, on the financial side, overseas capital keeps raising its allocation to U.S. equities, while surplus countries have become more dispersed. This means → rebalancing is harder this time around.
What role does AI play in all this?
Real-economy channel: U.S. AI investment leads the world, pulling in large imports of servers, chips, electronic components, and power equipment — directly widening the goods-trade deficit.
Financial channel: AI profit expectations draw global capital into U.S. tech assets, pushing up prices and easing funding conditions, which in turn supports yet more investment and imports.
In plain terms = real trade and financial allocation form a self-reinforcing loop — the hotter AI gets, the more the U.S. imports, the more global money flows in, and the wider the imbalance grows.
What happens to assets under three scenarios?
Base case: The AI boom continues and U.S. fiscal deficits stay high; current-account deficits and global imbalances most likely keep expanding. Global capital keeps flowing into U.S. tech assets, supporting the dollar in the near term. After leverage unwinds and high valuations digest, AI-linked sectors may still offer appeal.
Mild rebalancing: Requires coordinated moves — U.S. fiscal tightening, China boosting domestic demand, Europe increasing investment. CICC sees this as difficult to achieve. If the U.S. deficit narrows mainly through fiscal consolidation, lower Treasury supply could reduce the term premium, but dollar support from rate differentials and capital inflows would also weaken at the margin.
Tail risk: If AI investment returns consistently disappoint or leverage risk spikes, valuations could correct sharply — potentially triggering chain deleveraging. Risk assets fall; if slower growth and lower inflation arrive together, safe assets such as Treasuries benefit. The dollar may gain short-term liquidity support, while renminbi volatility increases.
Which variable should investors watch most closely?
CICC stresses that current-account imbalances alone do not necessarily move asset prices. What matters are the drivers behind the imbalance and how they evolve.
This means → the real test is whether AI capital expenditure can keep delivering on profit expectations — that determines whether the base case holds, and with it, the direction of global assets.
Content is for reference only, not financial advice.