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China’s artificial intelligence is a great leap forward: Australia’s opportunity?

Author  Haiqing Yu
Date 4 September 2023

China is building an ecosystem attractive to global Artificial Intelligence (AI) talent and capital. The US-led tech lash against Chinese companies and suspicion of scientists of Chinese background have been used by China to attract talents to do research and business. The takeout from this is surely that nurturing and attracting AI talents and protecting copyrights can be an area for Australia to invest in when developing our own AI capacity.

Industry insiders believe China’s market size is its advantage in the big data industry. China’s speedy integration of AI into existing products and services, widespread adoption of intelligent lifestyle, and flexible approach to user privacy and data protection for domestic companies and research institutions provide more opportunities for new ideas. Apart from a favourable ecosystem for AI start-ups and research, China’s approach to developing and regulating generative AI can attract global entrepreneurs and businesses who wish to explore alternatives to Euro-American models.

China’s response to ChatGPT is a new moment in the AI “Great Leap Forward”. An intensified race by its big tech players to develop generative AI and foundation models is known as the “Battle of One Hundred Models” (baimo dazhan). It is worth watching how this battle pans out and may present some lessons for Australia.

The AI Great Leap Forward has gained momentum since China’s “Sputnik moment” in 2017 when the computer program AlphaGo claimed victory over China’s best Go player. The same year China’s State Council announced a national plan to become a global leader in AI by 2030 and allocated $59 billion funding for R&D in AI software, hardware, intelligent robotics and vehicles, virtual reality and augmented reality. AI was viewed as a potential competitive advantage for manufacturing capability (as in the “Made in China 2025” plan) and an opportunity to catch up with big power rival such as the US. Since then, Chinese tech companies have been rolling out generative AI models in application fields such as media, art, education, and entertainment. They are also investing in global start-ups specialising in AI critical technologies.

China’s approach to generative AI has been ambitious but cautious. Like many countries, China has ethical and regulatory concerns. Developing a responsible and safe framework, prioritising research, and training a skilled workforce to meet new technological and regulatory challenges are viewed as equally important as fostering domestic innovation and intellectual property protection. Already an AI superpower with a projected AI economy of USD7 trillion by 2030, China will inevitably play a significant role in global AI governance and standard setting, according to a study by PriceWaterhouseCoopers.

Observers in the West have noted the Chinese Communist Party (CCP)’s obsession with information control. For example: Nicholas Welch and Jordan Schneider have noted that Chinese regulators require AI-generated content must “reflect core socialist values and … not contain content that subverts state power.” They point to a possible head-on collision between the country’s AI aspirations and its censorship regime.

Industry and academic observers in China hold a different view. They emphasise the balance between content moderation and innovation/creativity in the development, rollout and regulation of large language models (LLMs) in order to win the AI race. The Battle of One Hundred Models signals fierce competition among Chinese tech companies in the expensive and protracted LLM race. The race is led by bigger players like Baidu, Alibaba, Tencent, Huawei, and SenseTime, who are followed by an array of medium and smaller players who focus on narrow or vertical models that are faster to train, develop, and apply in industries than general AI or AGI (artificial general intelligence).

China has made significant progress in AI applications, such as facial and voice recognition, autonomous vehicles, robotics, and AIGC (AI-generated content). These technologies are widely used in automatic driving, e-commerce, healthcare, social media platforms, media, and art. AIGC and vertical LLMs aim to unlock China’s software-as-a-service (SaaS) potential and increase corporate productivity.

The global hype and widespread adoption of generative AI provoked controversy concerning privacy and data safety. Deepfakes are one example of facial recognition technologies that can be used for nefarious purposes. In China a face-swapping mobile app called ZAO was ordered off the shelves quickly in 2019 for violating user privacy. In January 2022 the Cyberspace Administration of China (CAC) issued algorithm and “deep syntheses tech” regulations, effective from January 2023, that are applicable to ChatGPT-style technologies.

In April 2023, CAC proposed new rules governing generative AI in China, with a focus on AIGC. These place significant responsibility on generative AI service providers including data and content labelling and filtering to ensure accuracy, respect for intellectual property, and avoidance of bias. In July CAC released the “Interim Measures for the Management of Generative Artificial Intelligence Services.” Unsurprisingly, the emphasis has been on balancing AI’s economic dynamism and state control, that is, strategically utilising AI to enhance China’s commercial, technological, and political goals while building adaptative regulatory framework in response to new cases and application scenarios.

China’s flexible and iterative approach to regulation is adaptable to fast changing technologies. China scholar Rogier Creemers has pointed out that the regulations may steer companies toward priority services and products in industrial and public sector applications.

The Carnegie Endowment for International Peace has characterised this approach in AI regulation as “vertical” (targeting specific AI applications or set of applications), which contrasts with the European Union’s horizontal approach (targeting most applications of the technology). China also takes a forward-thinking approach to the regulation of the input and output of LLMs, with attention to the societal impact of generative models.

Australia has many comparative advantages in digital innovation and multiculturalism. The Tech Council of Australia has noted that we can capture the potential of generative AI and strengthen our AI capability through global collaboration, particularly with our regional players. Australia can learn from China to have a forward-thinking approach to investment in research, computational, and infrastructural resources required for the development of generative AI and its applications. We can leverage our geographical and geopolitical advantages and multicultural human skills by taking an active role in regional and global dialogues on AI regulation, AI innovation, and their trade-off impacts for society.

View the orginal publication China’s artificial intelligence is a great leap forward: Australia’s opportunity? in Pearls and Irritations, John Menadue’s Public Policy Journal.