China could face “severe economic headwinds” if the Democratic Party’s sweeping midterm victory slows the US’s artificial intelligence buildout, Bloomberg Economics says — just as tech stocks across Asia slump on tech worries.

“Weaker US demand could create a glut in the ancillary AI components that anchor China’s exports, undercutting its AI-dominated growth model,” economists led by Chang Shu wrote in a report on Friday.

Investors are now worried that Democrats taking control of Congress may herald a tapping of the brakes on the AI industry’s breakneck growth and the hundreds of billions of dollars being plowed into the computer equipment behind it.

Net exports contributed nearly 40% of China’s economic growth in the third quarter, the highest share since early 2025. The surge in shipments has been led by high-tech products, especially electronics that go into the building of data centers. Chips and computers accounted for 40% of the on-year expansion in overseas shipments in the first nine months of this year.

Much of the surge in tech exports reflects soaring prices for chips and other AI hardware, and a sharp reversal in prices could squeeze Chinese exporters’ margins across the supply chain, according to Bloomberg Economics. The economists did say that any slowing of the AI pace in America “could narrow the US lead in model capabilities.”A slowdown in exports could raise pressure on Beijing to step up support for domestic consumer spending in a more meaningful way, something that investors and economists have long encouraged.

“The mounting risks raise the urgency for Beijing to rebalance growth by strengthening support for domestic consumption and curbing excessive industrial capacity,” Bloomberg Economics wrote.