In the latter half of 2023, the Asia Society Policy Institute’s Center for China Analysis (CCA) hosted a three-part webinar series to delve into China’s generative AI and AI technology landscape, AI’s impact on the Chinese economy, and AI’s role in the U.S.-China competition.

Led by Dr. Lizzi C. Lee, CCA Affiliated Researcher on Chinese Economy, the webinar series engaged leading experts on the technological-, economic-, and security-related elements of AI. Drawing from those expert discussions, this article summarizes the webinar series’ key findings and conclusions.

Introduction

China’s artificial intelligence (AI) strategy represents a strategic blend of government-led initiatives and national development goals, aiming to establish a substantial presence in the global AI market. Characterized by extensive government investment, a domestically led tech ecosystem, and sector-wide AI integration, this strategy is rapidly advancing China’s position as a technological superpower. Moreover, China’s pursuit of AI leadership is reshaping China’s technological and socioeconomic landscape, with significant implications for global power, global economic dynamics, and global governance of cutting-edge technologies.

At the same time, China’s progress in this technological realm raises critical questions regarding ethical standards, data privacy, international competition, and a potential shift in global technology leadership. China’s advances in AI position it as a challenger to established global norms and as a technological rival with the United States, influencing not just technology but also the future of international relations and great power dynamics.

To address these issues, the Asia Society Policy Institute’s Center for China Analysis (CCA) hosted a three-part webinar series in late 2023. Engaging world-leading experts, the webinars delved into China’s generative AI and AI technology landscape, AI’s impact on the Chinese economy, and AI’s role in the U.S.-China competition.

The inaugural webinar on August 24, 2023, dissected China’s AI trajectory, with Karen Hao, Zeyi Yang, Jenny Xiao, and Qiheng Chen offering insights into its technological strides, influential entities, and regulatory backdrop facilitating AI progression.

On September 27, 2023, the dialogue pivoted to AI’s economic ramifications within China. Dr. Lizzi C. Lee engaged with Nigel Inkster, Caiwei Chen, Michael Frank, and Elsa B. Kania, scrutinizing AI’s sector-wide impacts while considering ethical and security implications.

The series concluded on November 29, 2023, with an analysis of the U.S.-China AI contest, especially in defense and geopolitics. Conversations between Paul Scharre and Paul Triolo highlighted the competitive dynamics, obstacles, and global perspectives shaping this pivotal rivalry.

From those discussions, three overarching themes emerged: (1) the key features of China’s AI strategy; (2) the economic, social, and security ramifications of China’s AI pursuits; and (3) the implications of China’s AI progress for its global ambitions, including as an element in U.S.-China competition. These three themes are detailed below, followed by a recommended future agenda for assessing China’s AI ascent.

Key Features of China’s AI Strategy

The experts participating in the webinar series emphasized that the advent of generative AI has catalyzed a strategic redirection in China, highlighting the urgent need for advanced microchips, increased computational power, and substantial data center capabilities. This realization has fortified the Chinese government’s commitment to bolstering developments in these pivotal domains. While U.S. organizations such as OpenAI, Google, and Microsoft are at the forefront of research and software innovation, attention in China is progressively shifting toward the hardware and infrastructural elements that are crucial for AI advancement.

Participants in the webinar series observed that Chinese companies, initially lagging their U.S. counterparts in core research and software development, face additional hurdles due to stringent censorship regulations. However, by tapping into the open-source realm of Large Language Model (LLM) research, these firms are swiftly bridging the gap. Their focus has pivoted to crafting enterprise AI solutions that align with China’s industrial and strategic ambitions, demonstrating their strategic flexibility and alignment with government directives.

Speakers at the webinar series argued that China’s AI strategy is unequivocally state-centric, with the government playing a pivotal role in marshaling resources and steering AI advancements. This centralized approach is manifest in the government’s ability to amass and deploy vast data and resources, which are indispensable for AI development. Such strategic synchronization has enabled significant strides in areas including surveillance, facial recognition, health data management, autonomous vehicles, and robotics. The panelists emphasized that these advancements extend beyond mere technological achievements, serving directly to support China’s industrial, manufacturing, medical care, and next-generation infrastructure needs.

Aligned with governmental objectives, Chinese enterprises are primarily focusing on the industrial and business applications of AI. This approach, as the webinar series participants pointed out, diverges from a generic consumer-oriented strategy and is instead geared toward enhancing China’s industrial strength and global competitiveness. The deployment of AI in manufacturing processes, healthcare systems, and smart city initiatives is indicative of this targeted application.

The panelists also underscored China’s multidimensional AI approach, characterized by the harmonization of regional resource disparities and the nurturing of a resilient domestic tech ecosystem. This strategy, blending state-driven objectives with private sector agility, has crafted a unique AI narrative for China, where rapid development and deployment are intricately aligned with the nation’s overarching goals, cementing China’s position as an influential player in the global AI arena.

In contrast, in the United States, a robust private sector drives AI innovation. As the webinar experts highlighted, companies such as Google, Microsoft, and OpenAI are leading the charge in AI research and development, notably in areas including natural language processing, machine learning, and generative AI. This dominance of the private sector, coupled with a rich academic research ecosystem, nurtures a culture of groundbreaking innovation, expanding the boundaries of what AI can achieve and apply.

Economic, Social, and Security Implications

A second major theme to emerge from the webinar discussions concerned some of the broader economic-, social-, and security-related implications — both positive and negative — of China’s pursuit of AI excellence. On the one hand, it was argued that AI’s ability to reduce labor costs and enhance productivity is a particularly welcome development in light of China’s demographic shifts. The potential widespread implementation of AI in Chinese manufacturing to enhance efficiency and compensate for a diminishing workforce is a case in point.

However, on the other hand, a transition to greater AI-driven automation introduces economic complexities. Speakers at the webinar series argued that AI’s displacement effect could skew China’s economy further from consumption toward investment. They highlighted the risk of AI-induced overproduction in various sectors, potentially leading to intensified domestic competition, price wars, and potential trade disputes with advanced economies. While AI-driven efficiency offers certain benefits, it also risks aggravating systemic issues within China’s economic framework.

Beyond manufacturing, AI profoundly impacts white-collar professions and creative industries. Webinar participants highlighted that in such sectors as customer service and e-commerce, AI-driven tools such as chatbots and recommendation systems are becoming ubiquitous, reshaping consumer interaction dynamics. Even the realms of artistic creation, writing, and other creative fields are undergoing transformations due to AI’s capability to generate art, music, and literary content.

The penetration of AI into higher-skilled job markets points to potentially significant labor market disruptions in the years ahead. The panelists noted that white-collar workers and creatives, traditionally less vulnerable to technological displacement, are increasingly feeling AI’s impact. This shift presents new challenges for China’s workforce, necessitating a reassessment of job roles, skill requirements, and the broader economic paradigm.

In the healthcare sector, AI has emerged as a transformative force. The webinar experts noted that China is utilizing AI to enhance diagnostic accuracy, manage patient care, and personalize medicine. This integration is revolutionizing patient care, with AI algorithms aiding in early disease detection and treatment planning. However, it also raises concerns about data privacy, the ethical application of AI in medicine, and the need for a skilled workforce to manage these advanced technologies.

Regarding military applications, AI forms a crucial part of China’s strategy to modernize its defense capabilities. The integration of AI into China’s military apparatus spans intelligence, surveillance, reconnaissance, and autonomous weapon systems. While some speakers highlighted AI’s potential to augment decision-making, cyber operations, and battlefield efficiency — marking a significant evolution in military tactics and strategic thinking — others cautioned of the dangers inherent in more autonomous systems and the escalatory risks they could pose.

AI on the World Stage: Competition and Agenda Setting

A third principal theme highlighted in the webinar discussions related to how AI is increasingly a central element in China’s efforts to strengthen its influence on the world stage and, relatedly, is a key aspect of U.S.-China competition.

The panelists concluded, for example, that in response to U.S. sanctions, particularly in advanced chip technology, the past few years have marked a pivotal moment for China in defining its AI future. These sanctions have accelerated China’s shift toward a homegrown AI ecosystem, emphasizing a drive for technological self-reliance and sovereignty.

Speakers at the webinar series argued that this move is a direct response to vulnerabilities highlighted by dependence on foreign technology, signaling a significant shift in the global AI landscape. In addition, China’s Global AI Governance Initiative represents a strategic effort to reshape global AI narratives and standards. By aligning with the Global South, China is positioning itself as a formidable force in international AI governance, challenging traditionally Western-centric views.

Webinar participants highlighted that U.S.-China AI diplomacy continues to face difficulties, as seen in the limited progress in discussions on the regulation of cutting-edge AI models. These negotiations are taking place against a backdrop of differing AI governance approaches and ongoing geopolitical tensions.

Beyond U.S.-China competition, the panelists noted China’s advancements in ethical AI and data protection, particularly regarding generative AI models, reflect a growing conformity with global trends. The shift toward stricter data governance and ethical AI practices indicates China’s commitment to aligning with emergent international standards. This development, they argued, is a crucial component of China’s multifaceted AI strategy, which encompasses technological independence, global influence, and adherence to evolving global norms in AI applications.

Speakers at the webinar series also observed an intriguing convergence in the U.S.-China AI landscape, particularly due to the open-source nature of AI models and China’s rapid technological catch-up. Chinese tech companies have demonstrated notable agility in aligning with the international scientific and technological frontier, especially in chip capabilities and model sophistication. This catch-up effect, enabled by the global open-source movement, facilitates accelerated parity in AI development.

Furthermore, there is a growing mutual recognition of the importance of AI ethics and data protection. Both nations are increasingly acknowledging the need for responsible AI governance, evident in their diplomatic efforts to shape AI governance and rule setting. This convergence in AI ethics and data governance, a critical aspect of AI’s global impact, suggests at a minimum some shared understanding of AI’s broader societal implications.

However, as noted above, the economic and technological ecosystems of the United States and China diverge considerably. This divergence, the speakers emphasized, is not just technological but also institutional, with each country vying for greater influence in international standard setting. China, along with its partners, presents a contrasting narrative and set of priorities compared to the United States and its allies and partners, mostly in the economically advanced world.

Conclusion: Assessing China’s AI Ascent

China’s ambitious foray into AI heralds a complex future, necessitating nuanced analysis and strategic foresight. The webinar series shed new light on China’s AI agenda: balancing state-led industrial growth, technological self-reliance, and aspirations for global governance influence. However, this trajectory is fraught with challenges, and many questions remain unanswered and deserve greater attention and analysis.

One of the most important questions concerns the sustainability and global impact of China’s turn toward an autarkic AI ecosystem. Research must critically assess the viability of China’s inward technological focus and its repercussions for international tech dynamics.

The societal ramifications of AI’s pervasive integration across sectors in China, particularly with regard to labor displacement and ethics concerns, present another pivotal area demanding far greater understanding. Such understanding of how China intends to navigate these socioeconomic shifts and ethical quandaries, especially in surveillance and healthcare, will be vital to assessing not only the country’s technological progress but its internal social dynamic as well.

Moreover, China’s burgeoning influence in global AI governance norm setting demands rigorous examination. Further work is needed to delve into the consequences of China’s approach to shaping international AI policies and standards. An exploration of potential AI-related synergies and clashes between the Global South and advanced economies will be increasingly important in the years ahead.

Finally, the stark contrast between China’s state-centric AI model and the U.S. market-driven framework presents a rich vein for comparative research. In particular, this research should assess the merits and limitations of state-led versus market-led approaches in AI policy and development.