The Democratic Party swept both the House and Senate in the U.S. midterm elections, throwing the global AI industry into a period of adjustment as infrastructure investment faces potential slowdowns, according to financial markets and foreign media reporting on Nov. 9.
Democrats campaigned on limiting data center construction due to growing resident backlash over electricity consumption, noise, and scenery damage. This legislative shift threatens to stall the large tax cuts and AI infrastructure expansion previously pursued by the Trump administration.
China eyes an opening as U.S. restrictions loom
With U.S. AI development facing potential delays, observers suggest China could find an opening to narrow the technology gap. Meng Qinji, a global governance researcher at Tsinghua University, stated that if AI industry development is delayed in the U.S., it could open a very rare window of opportunity for China to catch up with the U.S.
Gary Ng, chief economist at French investment bank Natixis, noted that China will see any situation in which the U.S. AI industry slows as an opportunity to narrow the gap,
adding that China has weaker resistance to data center construction, abundant power supply and a well-developed industrial ecosystem.
China has secured a “rare window” to narrow the gap with the US in artificial intelligence if the Democrats’ midterm election victory slows American infrastructure expansion, according to analysts. The technological rivalry between Washington and Beijing has grown fiercer during…
China is actively advancing state-led infrastructure projects, including large data center clusters in the Inner Mongolia Autonomous Region under the East Data, West Computing
initiative. At the same time, the country is pushing to localize advanced semiconductors, upgrade algorithms, and expand global market share by promoting low-cost, open-source AI models.
Tighter export controls and market reactions
However, analysts warn that a Democratic victory is not purely good news for China, as Democrats have traditionally maintained a tougher stance on blocking access to advanced technology.
Dan Wang of Eurasia Group predicted that a landslide Democratic win could actually deal a much bigger blow to China’s AI ecosystem
if export controls tighten and cut off Chinese firms like ByteDance, Alibaba, and Tencent from securing American AI chips via overseas data centers.
Financial markets have already begun reacting to the policy uncertainty. On the Tokyo stock exchange, NAND flash memory maker Kioxia dropped 35% last week over concerns that slowing AI investment will weaken customer demand, alongside heavy selling pressure from a margin-buying balance of approximately 52 million shares.
Earlier coverage: US Midterm Elections: Democratic Victory Triggers AI Sell-Off and Market Volatility
