Best of both worlds? How does artificial intelligence foster inclusive growth in China

Amid the accelerating wave of technological transformation, whether artificial intelligence (AI) can simultaneously advance equity and efficiency has emerged as a critical global issue. This study leverages a quasi-natural experiment based on the implementation of China's New-generation Artificial Intelligence Pilot Zones Policy and employs a panel dataset of Chinese cities to investigate the impact of regional AI development on inclusive growth. The empirical results demonstrate that AI significantly promotes inclusive growth. This positive effect operates primarily through two mechanisms: the innovation promotion effect and the rural revitalization effect, both of which facilitate a more equitable distribution of economic benefits across different social groups. Heterogeneity analysis further reveals that the effect is more pronounced in cities with stronger government emphasis on rural revitalization, higher levels of governance transparency, and in central and western regions of China. Moreover, spatial Durbin model estimations confirm significant spatial spillover effects, suggesting that AI pilot zones not only benefit local development but also enhance inclusive growth in adjacent areas. These findings offer new theoretical insights into the role of AI in fostering balanced regional development and provide robust empirical support for policies aimed at optimizing AI deployment and promoting inclusive growth.