Artificial Intelligence (AI) is playing an increasingly important role in the Chinese economic and daily scenario. Smart cities, drones that deliver food directly to homes and self-driving vehicles are becoming the daily reality in many cities in the Middle Reign. It’s not just the eyes that testify that this sector now represents the future of China, it’s also the numbers that confirm it.

In 2021 data reported that the artificial intelligence market was worth about 150 rmb (more than 23 billion dollars) and expect it to reach 400 billion rmb by 2025. With the application of the AI ​​sector also on the medical front, it is estimated that this market could even reach 600 billion dollars a year, this will be possible above all thanks to the investments made largely by the Central Government which has the issue very close to heart.

China has taken the lead in shaping AI regulations. The country has a number of broader programs to stimulate the development of the AI ​​industry, such as Made in China 2025, the Action Outline for Promoting the Development of Big Data (2015), the Next Generation Artificial Intelligence Development Plan ( 2017). In recent years, China has also accelerated the pace to enact specific policies to regulate AI, regarding industry ethics and algorithms. Chinese regulators have cracked down on the country’s biggest tech companies, ramping up oversight on data security and overseas listing policies, but some regulatory easing has been reported. Facing now fiercer competition globally, China is once again looking to its technology sector for greater leverage.

In recent years, Shanghai can be said to have accelerated the pace in the development of the AI ​​industry. AI is one of three leading industries that Shanghai seeks to develop with coordinated efforts, alongside integrated circuits and biomedicine. On September 22, 2022, Shanghai passed China’s first provincial-level AI development law, the Shanghai Regulations on Promoting the Development of the AI ​​Industry (Shanghai AI Regulation), effective as of October 1, 2022. Shanghai AI aims to foster innovation and breakthroughs through the development of AI core industries and strengthening the conglomeration of AI enterprises.

On September 6, 2022, the Shenzhen government also approved China’s first local regulation dedicated to promoting the development of AI: the Regulation on the Promotion of Artificial Intelligence Industry in Shenzhen Special Economic Zone (the Regulation on AI of Shenzhen), which entered into force on November 1, 2022. The Shenzhen AI Regulation aims to promote the AI ​​industry by encouraging government organizations to be pioneers in using this technology and by increasing financial support for AI research. It also establishes public data sharing guidelines for organizations and businesses involved in the industry. Currently, Shenzhen, home to many tech giants and AI-related companies, is stepping up efforts to grow its high-tech sector. To pursue its goal of becoming China’s AI and technology powerhouse, Shenzhen is set to invest more than RMB 700 billion (US$108 billion) in hi-tech R&D during 2021-2025.

China and the US are racing to increase their respective commercial and technical competitiveness in AI. The US has imposed a series of export restrictions that could hit China’s AI industry, which still needs some foreign chips. Domestic and international markets have provided mixed signals. Faced with growing uncertainties, mainly due to international competition. While export bans may take some time to take effect, companies can commit to stockpiling chips to maintain sufficient reserves. On the other hand, the Chinese AI industry is a priority area of ​​development and growing rapidly. The restrictions will motivate China to invest more decisively and increase the pace towards self-sufficiency.

While China lacks some advanced AI software and equipment capabilities, the environment remains open to foreign investment and talent. By taking full advantage of China’s supportive policies, companies can adjust their business strategies to invest more in R&D and talent. The AI ​​industry is still promising in China and offers a lot of space for the development of enterprises in the sector, as well as a series of incentives for R&D innovation.


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