Sino Strategies: China's Influence & its Implications for the U.S.

This week, Prime Minister Rishi Sunak of the UK hosted an AI Safety Summit to convene global business and government leaders for high-level meetings on the future of AI technologies. The summit included discussions on the policy implications of major advances in machine learning and AI and set the world on a path to reduce the risks and secure greater benefits from these critical and ever-evolving technologies. 

China was present and engaged in the dialogues hosted at the AI Safety Summit. As one of the leading countries in AI development, China has an important role in setting the global stage and trajectory for the development of safe AI technologies. Against the backdrop of the Safety Summit, this article takes a look at Chinese AI innovation, including the current state and likely future of technology development in the PRC, and at what U.S. policymakers, businesses, and consumers could take into account with respect to China’s AI plans. 

China’s AI Landscape

China’s market for AI technologies and services is one of the largest in the world. China generates more AI-related research per year than any other country. Over a thousand startups received 95 billion USD in private investments over the period from 2013 to 2022, a figure trailing only the U.S. during that time frame, and an estimated 15 billion USD in venture capital funding has been invested in China for AI companies. 

AI is also a central element in China’s domestic and foreign policy vision. In 2017, China’s Ministry of Science and Technology launched a Three-Year Action Plan to Promote the Development of New-Generation Artificial Intelligence Industry. The plan included designation of large Chinese tech companies – Baidu, Alibaba, Tencent, and iFlytek – to serve as “national champions” for advancing Beijing’s AI agenda and developing key technologies in coordination with the Ministry of Science and Technology. The list of tech players was expanded in 2019 to facilitate coordinated development of AI ecosystem standards and synchronized enterprise developments in AI through open information channels and innovation platforms. Domestic technology development remains a cornerstone of China’s economic development policy.

Financial support for China’s AI development has both domestic and international sources. Internally, Beijing leverages local subsidies and grants – such as those funded by the Artificial Intelligence Industry Alliance – as well as public-private Government Guidance Funds to support AI initiatives and foster innovation. Externally, foreign investment ties, especially with the U.S., have been the main source of capital for China’s AI development. Investment strategy and funding mechanisms, both domestic and foreign, play an important role in enabling science and technology research & development, and China will likely continue to align its AI strategy around its innovation financing strategy. 

China’s AI Aspirations

The AI Safety Summit hosted in the UK gathered senior government officials, executives of AI companies, and civil society leaders for a discussion to establish a global AI safety regime. The main output of the meeting was the Bletchley Declaration, a joint commitment by twenty-nine governments and multilateral organizations – including China – subjecting AI models to a suite of tests before release, as well as the announcement of sustained international dialogue and research on AI safety issues. To this end, Wu Zhaohui, China’s vice-minister of science and technology, told fellow delegates at the summit that China upholds “the principles of mutual respect, equality and mutual benefits [and that] countries regardless of their size and scale have equal rights to develop and use AI.”

In light of the output of the UK AI Summit, China’s approach to AI development will likely continue to be heavily regulated by governing Chinese entities. Beijing instituted a law earlier this year to regulate the management of generative AI by specifically introducing restrictions on the training data and outputs generated by enterprises providing generative AI products and services. This law is an indicator of China’s broader sentiments on AI development and Beijing’s strategy for driving AI innovation. It is likely that technology development will continue to be fueled and directed by governing entities and the interests of China’s leadership.

Implications for the U.S.

1. U.S. Policy Implications

The U.S. could seek to work closely with China and other signatory nations on implementing the plans described in the Bletchley Declaration. The development of safe, secure, unbiased AI algorithms and technologies could impact many organizations around the world, to the extent that all nations – and certainly the Bletchley nations – have a stake in ensuring the development of safe AI algorithms. Furthermore, the U.S. could continue to promote international law and order, especially as it pertains to the development of AI technologies. 

To keep pace with Chinese AI development, the U.S. could consider reinforcing its domestic technology workforce. Enhancing the talent available to develop AI algorithms and technologies, as well as facilitating innovation through an enhanced ecosystem, would enable the U.S. to remain competitive with other countries, especially China. Innovation grants and competitions, partnerships with universities, and funding for doctorate AI degrees are avenues the U.S. could consider to enhance its domestic technology workforce.

Given the likelihood of a substantially regulated AI-development ecosystem in China, the U.S. may also have to pursue deeper partnerships with allies and strategic investments in AI away from China. Western-led development of AI – streamlined by the U.S. and allies – could ensure AI solutions adhere to global rules of law and order and avoid the pitfalls associated with Chinese regulations. 

2. U.S. Business Implications

U.S. players will likely face increasingly steep competition from Chinese companies in AI. To remain competitive, American companies could form partnerships with other Western players and work more closely with the U.S. government, taking advantage of subsidies and other incentives specifically geared towards the development of AI. 

Additionally, the U.S. has an advantage in natural language processing (NLP) technologies over China. Therefore, U.S. companies looking to leverage the AI ecosystem or break into the AI market would have the benefit of a robust and competitive research & development environment for building NLP products and algorithms. 

3. U.S. Consumer Implications

For U.S. consumers, AI-enabled companies have the potential to enhance customer experience through increased personalization, predictive shopping, and optimized discount identification. In these ways, companies that develop safe AI solutions and services could streamline U.S. consumers’ everyday lives, and consumers who take advantage of these companies’ offerings would enhance their own everyday lives.

U.S. consumers may have to pay close attention to the source of AI technologies, however. AI products and services developed by Chinese players may have links to the Chinese government.