China is on track to be world AI leader by 2030, with Hong Kong’s help

China’s AI market, firms and tech are growing strongly, while the regulatory climate is maturing. Hong Kong can contribute by providing AI talent and funding

Oriol Caudevilla

Published: 5:30am, 5 Jan, 2024

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If we are in the midst of a global race for artificial intelligence (AI) breakthroughs, China is definitely a key player. While 2023 has been a year of AI hype – especially for generative AI, amid the popularity of ChatGPT – the industry has been of interest to most countries for years and will only become more important.

According to the 2023 AI Index Report by the Stanford Institute for Human-Centred Artificial Intelligence, global investment in AI has significantly increased over the last decade. By 2022, private investment in AI had grown to 18 times greater than in 2013.

Back in 2017, China made AI a national priority, stating its ambition to become “the world’s premier artificial intelligence innovation centre” by 2030.

According to the State Council’s 2017 guidelines, AI should be used to promote China’s technology, economy and social welfare, maintain national security and contribute to the world. The guidelines also said: “AI should be applied in the public service and social management to build a safer, more comfortable and convenient society.”

Why are nations racing to achieve AI dominance? One reason is that AI is a foundational technology with the capacity to increase productivity, boost competitiveness and help solve social challenges.

So what does the AI industry in China look like? According to a recent Nikkei study, “China is the undisputed champion in artificial intelligence research papers … far surpassing the US in both quantity and quality”.

China’s AI market is projected to reach US$38.89 billion this year, and will grow by a compound annual rate of 18 per cent to reach US$104.7 billion by 2030. This is less than the US market, the world’s largest at a projected US$106.5 billion this year.

In addition, China has more than 4,300 AI enterprises and at least 238 large language models (LLMs) – deep-learning AI algorithms based on very large data sets – with tech giants such as Baidu, Alibaba (owner of the South China Morning Post) Tencent, Meituan and iFlyTek all venturing into the field.

It is fair to say China can indeed become a world leader in AI by 2030. This is especially given its number of AI companies, number of people working in them, advanced AI infrastructure and supportive policies.

Furthermore, China has 975 million smartphone users, by far the highest in any country, meaning it generates a vast amount of digital information – and data plays a paramount role in developing AI.

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How does China’s AI stack up against ChatGPT?

From a regulatory perspective, China has taken a further step towards digitalisation and innovation. At the third Belt and Road Forum for International Cooperation, President Xi Jinping proposed the Global AI Governance Initiative for countries participating in the Belt and Road Initiative.

The initiative calls for a “people-centred” approach to AI (i.e., developing AI for the good of humanity and its progress), more inclusiveness and fairness in AI development so countries can benefit regardless of their political or economic situation, testing and assessment systems based on AI risk levels, and regulation reform to protect privacy and data security.

Even though Global AI Governance Initiative is not the first multilateral forum on AI, it is undoubtedly one of the bigger ones, with potential implications for the AI regulatory scene across the globe.

How Hong Kong can play a role in preventing AI Armageddon

Meanwhile, Hong Kong has a key role to play in China’s AI development. Financial Secretary Paul Chan Mo-po has said the city can contribute by providing talent and funding.

At the World Artificial Intelligence Conference in Shanghai in July, Chan said Hong Kong had advantages when it came to attracting talent in the current geopolitical landscape: “Our universities have brought together scientific researchers from the mainland and around the world, and the Hong Kong government has given a lot of policy and financial support in the past few years.”

Moreover, Chan added, the Greater Bay Area has formed “the whole industrial chain of AI from research to market application”.

To sum up, China will probably become the global AI leader and Hong Kong has a role to play in this. China’s AI industry is powerful and will keep on growing. While it is still too early to say if the Global AI Governance Initiative will be a success, it is relevant that China starts leveraging the Belt and Road Initiative.

Dr Oriol Caudevilla is an honorary fellow at the Asian Institute of International Financial Law at the University of Hong Kong and a board director at the Global Impact FinTech Forum. The views do not necessarily reflect those of any of the organisations the author collaborates with