This paper examines whether public debt expansion promotes or inhibits the development of advanced productive forces, using artificial intelligence (AI) development as a representative indicator. Drawing on data from Chinese prefecture-level city investment bonds and A-share listed firms over the period 2013–2023, we investigate the impact of public debt expansion on firms’ advanced technology development and the underlying mechanisms. The results indicate that public debt expansion significantly suppresses firms’ investment in advanced technologies and the development of advanced productive forces. Mechanism analysis shows that this negative effect operates primarily through intensified financing constraints and the crowding-out of R&D investment […]