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The artificial intelligence industry in China is a rapidly developing multi-billion dollar industry. As of 2021, the market of artificial intelligence is worth about RMB 150 billion (US$23.196 billion), and the figure is projected to reach RMB 400 billion (US$61.855 billion) by 2025.[1] China's AI development started in late 1970s after the Economic Reform emphasizing science and technology as China's primary productive force. However, the early stage of China's AI development was slow and faced serious challenges of lacking resources and talents. Most researches were led by scientists who received higher education abroad. Unlike now, when China just started to develop its AI industry, it had an enormous gap comparing to most western countries. Since 2006, China has steadily developed a national agenda for artificial intelligence development, and has emerged as one of the leading nations in artificial intelligence research and development.[2] Starting late 2010s, China has announced its ambition to become the global leading AI powerhouse by 2030 in its thirteenth Five-Year Plan and aims to reach over 1 trillion RMB worth AI industry by the same year[3]. To reach the goal, China has broken down into three stages setting benchmarks for 2020, 2025, and 2030 respectively, as well as releases a handful of policies, including 'Internet + AI' and 'New Generation AI Development Plan', to incentivize the industry growth. Many estimated that China's AI development would contribute approximately 0.8% - 1.4% annual economic growth rate to China's economy[4].

China's central government has a list of 'national AI team' including fifteen China-based companies, including Baidu, Tencent, Alibaba, SenseTime, and iFlytek. Each company is supposed to lead the development of a designated specialized AI sector in China, such as facial recognition, software/hardware, voice intelligence, and others. China's drastic AI development brought significant impacts to China's society in all aspects, including socio-economic, military, and political impacts. Agriculture, transportation, accomodation and food services, and manufacturing are top industries that would be the most impacted by AI deployment. At the same time, scholars warned a potential negative impact to China's labor market and disproportionate benefits between urban and rural, coastal and inland, and among different income groups[5]. Besides, strengthening nation's military power is another major factor for countries including China to engage in the global AI competitions. The private sectors, university laboratories, and the military are working collaboratively in many aspects as there is a few current existing boundaries[6]. As China continues expanding its AI industry, there are ethical and regulatory concerns yet to be addressed, such as data control and user privacy. In 2021, China published its first national law, China's Data Security Law, addressing AI-related ethical concerns.

History[edit]

Late 1970s - Early 2000s[edit]

Artificial intelligence research and development did not start until the late 1970s after the Economic Reform when Deng Xiaoping announced his famous phrase, ‘science and technology are primary productive force’ (科技是第一生产力). Deng’s speech demonstrated PRC’s commitment to technological innovation. While there is a lack of AI-related research between the 1950s and 1960s, some scholars believe this is due to the influence of the ‘Cybernetics’ from the Soviet Union despite the Sino-Soviet split during the late 1950s and early 1960s[7]. In the 1980s, a group of Chinese scientists started to launch AI research led by Qian Xuesen and Wu Wenjun[8]. However, during the time, China’s society still hold a generally conservative view towards AI[9]. The early AI development in China was difficult and faced numerous challenges. China’s government approached these challenges by sending Chinese scholars overseas to study AI and further providing government funds for research projects. The Chinese Association for Artificial Intelligence (CAAI) was founded in September 1981 authorized by the Ministry of Civil Affairs[10]. Even now, CAAI is still the only national academic association in China that specializes in technology and intelligence science[11]. The first chairman of the executive committee was Qin Yuanxun who completed a Ph.D. degree in Philosophy from Harvard University. In 1987, China’s first research publication on artificial intelligence was published by Tsinghua University. Starting from 1993, smart automation and intelligence have been listed as a part of China’s national technology plan[12]. Beginning from the 2000s, China has further expanded its R&D funds on AI and the number of government-sponsored research projects has dramatically increased. In 2006, China announced the policy priority in development of artificial intelligence, which is included in the National Medium and Long Term Plan for the Development of Science and Technology (2006-2020), released by the State Council.[2]

Late 2010s - Early 2020s[edit]

The State Council of China issued the "A Next Generation Artificial Intelligence Development Plan" (State Council Document [2017] No. 35) on July 8, 2017, in which the CCP Central Committee and the State Council urged the governing bodies of China to promote the development of artificial intelligence. Specifically, the plan describes AI as a “strategic technology” that has become a “focus of international competition”.[3]:2 The document urges significant investment in a number of strategic areas related to AI and calls for close cooperation between the state and private sector. On the occasion of CCP general secretary Xi Jinping's speech at the first plenary meeting of the CMCFDC, scholars from the National Defense University in their analysis of the integration of military and civilian development wrote in the PLA Daily that the "transferability of social resources" between economic and military ends is an essential component to being a great power.[13]

In 2018, the State Council budgeted $2.1 billion on an AI industrial park in Mentougou district.[14] In order to achieve this end, the State Council states the need for massive talent acquisition, theoretical and practical developments, and public and private investments.[3] Some researchers and scholars argued China’s commitment to its global AI leadership and technological competition is driven by its previous underperformance in innovation, which is seen as a part of the ‘century of humiliation’ since the Qing Dynasty by the central government[15]. There are historically embedded causes to China’s high anxiety towards securing an international technological dominance – China has missed both industrial revolutions, the one starting in Britain in the mid-18th century, and the one that originated in America in the late-19th century[16], Therefore, China’s government desires to take advantage of the technological revolution in today’s world led by digital technology including AI, to resume china’s ‘rightful’ place and to pursue China’s national rejuvenation proposed by Xi[17][18]. Some of the stated motivations that the State Council has given for pursuing its AI strategy include the potential of artificial intelligence for industrial transformation, better social governance and maintaining social stability.[3] The State Council reports three general milestones for their integration of artificial intelligence into their industrial economy.[3] By 2020, the State Council predicts that China will have contributed globally to hardware, software, and methods pertinent to artificial intelligence. Specifically, the State Council projects the value of AI core industry in China to be worth 150 billion RMB, with a value of over 1 trillion RMB when accounting for related industries.[3]

Future Projection[edit]

By 2025, the State Council aims for China to have fundamentally contributed to basic AI theory, solidifying its place as a global leader in AI research. Further, the State Council aims that "AI becomes the main driving force for China's industrial upgrading and economic transformation" by this time. The State Council projects the value of AI core industry in China to be worth 400 billion RMB, with a value of over 5 trillion RMB when accounting for related industries.[3] By 2030, the State Council targets China to be the global leader in the development of artificial intelligence theory and technology. The State Council claims that China will have developed a "mature new-generation AI theory and technology system." At this point, the State Council projects the value of AI core industry to be worth 1 trillion RMB, with a value of over 10 trillion RMB when accounting for related industries.[3]

List of China's Major AI-Related Policy[edit]

Year Policy Document Issued by
2015 Made in China 2025 (中国制造2025) Premier Li Keqiang and his cabinet
2015 “Guiding Opinions of the State Council on Actively Promoting the "Internet Plus" Action” (国务院关于积极推进“互联网+”行动的指导意见) State Council of the People's Republic of China
2016 Thirteenth Five-Year Plan of China (中华人民共和国国民经济和社会发展第十三个五年规划纲要) State Council of the People's Republic of China
2016 “Internet +’ AI Three-Year Implementation Plan” (新一代AI产业发展三年行动计划） National Development and Reform Commission;

Ministry of Science and Technology; Ministry of Industry and Information Technology; the Central Leading Group for Cyberspace Affairs

2017 "New Generation AI Development Plan" (新一代人工智能发展规划) State Council of the People's Republic of China
2019 Guidelines for the Construction of the National New Generation Artificial Intelligence Open Innovation Platform" （国家新一代人工智能开放创新平台建设工作指引） Ministry of Science and Technology
2020 "National New Generation of AI Standardization Guidance" (国家新一代人工智能标准体系建设指南) National Standardization Administration;Central Cyberspace Administration;

National Development and Reform Commission; Ministry of Science and Technology Ministry of Industry and Information Technology

2021 Fourteenth Five-Year Plan of China (中华人民共和国国民经济和社会发展第十四个五年规划纲要) State Council of the People's Republic of China
2021 “A new generation of artificial intelligence ethics code” （新一代人工智能伦理规范） Ministry of Science and Technology
2021 China's Data Security Law (中华人民共和国数据安全法) State Council of the People's Republic of China

China's AI Readiness[edit]

Government Agenda[edit]

According to a February 2019 publication by the Center for a New American Security, China’s leadership – including Chinese leader Xi Jinping – believes that being at the forefront in AI technology will be critical to the future of global military and economic power competition.[19] China is by far the United States’ most ambitious competitor in the international AI market, and China's 2017 “Next Generation AI Development Plan” describes AI as a “strategic technology” that has become a “focus of international competition”.[3]:2 According to the document, China will seek to develop a core AI industry worth over 150 billion RMB132—or approximately $21.7 billion—by 2020 and will “firmly seize the strategic initiative” and reach “world leading levels” of AI investment by 2030.[3]:2-6

According to AI Readiness Index 2020 published by Oxford Insights, China is ranked No.19 globally with an index score of 69.08/100[20]. The report highlighted China’s score might be higher in reality since the AI index did not measure actual AI implementation itself[21]. AIDP has divided China’s AI development into three stages[22]:

  1. 2020 as the first benchmark: China’s AI industry could match with most AI-advanced nations with a value of 150 billion RMB;
  2. 2025 as the second benchmark: become a world leader in certain AI fields with a value of 400 billion RMB;
  3. 2030 as the third benchmark: become the world’s primary AI innovation hub with a value of over 10 trillion RMB

Global Rank[edit]

According to Statista, China’s AI market reached over 128 billion RMB by 2020, and yet the market is continuing to grow. In today’s global AI racing competition, China shared 19% of the total global AI funding deals, which is ranked No.2 behind the U.S. (41%)[23]. According to China’s 14th Five-Year Plans, the document covering China’s plans for the period between 2021 and 2025 released in 2021 by the National People’s Congress, it mentioned the word ‘smart intelligence’ 57 times and highlighted the following goals[24][25]:

  1. Breakthrough core AI technology barriers '突破核心技术’
  2. Enhance the digital economy and integrate industrial AI implementation to reach a smart economy ecosystem and a full digital transformation ‘打造数字经济优势，融合产业应用与数字化转型，逐渐形成智能经济形态’
  3. Have a comprehensive regulatory framework addressing potential concerns and risks brought by AI '构建与数字经济发展相适应的政策法规体系’

Industry Readiness[edit]

Industry-wise, China’s large demographic population generates a massive amount of accessible data for companies and researchers, which offered a crucial advantage in the race of big data. For instance, facial recognition is one of the most widely AI applications in China. Collecting these large amounts of data from its residences helped further train and expand the AI capabilities. China’s market is not only conducive and valuable for corporations to further AI R&D but also has offered tremendous economic potential attracting both international and domestic firms to join the AI market. The drastic development of the information and communication industry (ICT) and AI chipsets in recent years are two examples of it[26].

China's AI Research & Development[edit]

China’s AI research and development are cross different sectors and organizations, including private-public collaborations, academia-private collaborations, government-led projects, and many others. Many scholars believe China has adopted a ‘catch-up’ approach for its AI development, which is also apparent through all the policy documents[27]. For public AI R&D spending, China has outspent the U.S. government for past a few years. The Chinese public AI funding mainly focused on advanced and applied research[28]. The government funding also supported multiple AI R&D in the private sector through venture capitals that are backed by the state[29]. Many analytic agency research showed that, while China is massively investing in all aspect of AI development, facial recognition, biotechnology, quantum computing, medical intelligences, and autonomous vehicles are AI sectors with the most attention and funding[30].


According to national guidance on developing China’s high-tech industrial development zones by the Ministry of Science and Technology, there are fourteen cities and one county selected as experimental development zone[31]. Zhejiang and Guangdong provinces have the most number of AI innovation experimental zones. However, focus of AI R&D varied depending on cities and local industrial development and ecosystem. For instance, Suzhou, a city with longstanding strong manufacturing industry, heavily focuses on automation and AI infrastructure while Wuhan focuses more on AI implementations and the education sector.[32]

Recent Chinese achievements in the field demonstrate China's potential to realize its goals for AI development. In 2015, China's leading AI company, Baidu, created AI software capable of surpassing human levels of language recognition, almost a year in advance of Microsoft, the nearest U.S. competitor.[33] In 2016 and 2017, Chinese teams won the top prize at the Large Scale Visual Recognition Challenge, an international competition for Computer vision systems.[34] Many of these systems are now being integrated into China's domestic surveillance network and Social Credit System, which aims to monitor and, based on social behavior, “grade” every Chinese citizen by 2021.[35]


In China, the majority of peer-reviewed AI publications are associated with academia, which made up approximately 95.4% of the total number in 2019[36]. This is similar to the European Union. Interdisciplinary collaborations play an essential role to China’s AI R&D, including academic-corporate collaboration, public-private collaborations, and international collaborations[37]. Projects with corporate-government partnerships are the most common out of all kinds. The government incentivizes firms’ technological innovation through policies, funding, and national endorsements. As the history section mentioned showed already, China’s central government released a series of policy frameworks and guidance with the embedded goal of being the global AI leader. As for AI publications, China is ranked Top three worldwide following the United States and European Union for the total number of peer-reviewed AI publications that are produced under a corporate-academic partnership between 2015 and 2019[38]. Besides, according to an AI index report, China has surpassed the U.S. in 2020 in the total number of global AI-related journal citations[39]. In terms of AI-related R&D, China-based peer-reviewed AI paper is mainly sponsored by the government.

Industrial Impacts[edit]

Economic Impact[edit]

According to McKinsey’s 2017 report, China’s economic growth would enjoy approximately 0.8% - 1.4% annual growth rate from AI-led automation and increases in domestic productivity[4]. Food services, agriculture, manufacturing, and accommodations are the top industries that will be most benefited from AI deployment. The annual growth rates might vary between agencies. For instance, Accenture estimated AI would add 1.6% economic growth to China by 2035[5]. World Economic Forum stated that, by 2017, there are two-thirds of the total AI investments worldwide rushing into China resulting in a 67% annual growth rate for China’s AI industry[40]. In 2019, an article published by China Daily, a state-sponsored media, specifically highlighted high-technology manufacturing industries as a strong driver to China’s stable economic growth[41].

Most agencies hold optimistic views towards AI’s economic impact to China’s long-term economic growth. In the past, traditional industries in China have struggled with the increase in labor costs due to the growing aging population in China and low birth rate. With the deployment of AI, operational costs are expected to reduce while an increase in efficiency generates revenue growth[42]. Some highlight the importance of a clear policy built-out and governmental support in order to overcome certain adoption barriers including costs and lack of properly trained technical talents and AI awareness[43]. However, there are concerns about China’s deepening income inequality and the ever-expanding imbalanced labor market in China. Low- and medium-income workers might be the most negatively impacted by China’s AI development because of rising demands in laborers with advanced skills[44]. Furthermore, China’s economic growth might be disproportionately divided as a majority of AI-related industrial development is concentrated in coastal regions rather than inland[45].

Military Impact[edit]

China is researching various types of air, land, sea, and undersea autonomous vehicles. In the spring of 2017, a civilian Chinese university with ties to the military demonstrated an AI-enabled swarm of 1,000 uninhabited aerial vehicles at an airshow. A media report released after the fact showed a computer simulation of a similar swarm formation finding and destroying a missile launcher.[6]:23 Open-source publications indicate that China is also developing a suite of AI tools for cyber operations.[6]:27 [46] Chinese development of military AI is influenced in large part by China's observation of U.S. plans for defense innovation and fears of a widening “generational gap” in comparison to the U.S. military. Similar to U.S. military concepts, the Chinese aim to use AI for exploiting large troves of intelligence, generating a common operating picture, and accelerating battlefield decision-making.[6]:12-14[46]

China's management of its AI ecosystem contrasts with that of the United States.[6]:6 In general, few boundaries exist between Chinese commercial companies, university research laboratories, the military, and the central government. As a result, the Chinese government has a direct means of guiding AI development priorities and accessing technology that was ostensibly developed for civilian purposes. To further strengthen these ties, the Chinese government created in January 2017 a Military-Civil Fusion Development Commission, which is intended to speed the transfer of AI technology from commercial companies and research institutions to the military.[6]:19[2] In addition, the Chinese government is leveraging both lower barriers to data collection and lower costs to data labeling to create the large databases on which AI systems train.[47] According to one estimate, China is on track to possess 20% of the world's share of data by 2020, with the potential to have over 30% by 2030.[6]:12[46]

China's centrally directed effort is investing in the U.S. AI market, in companies working on militarily relevant AI applications, potentially granting it lawful access to U.S. technology and intellectual property.[48] Chinese venture capital investment in U.S. AI companies between 2010 and 2017 totalled an estimated $1.3 billion.[49][46]

Academia[edit]

Although Peking University introduced in 2004 the first academic course on AI which led other Chinese universities to adopt AI as a discipline,[14] China faces challenges in recruiting and retaining AI engineers and researchers. Over half of the data scientists in the United States have been working in the field for over 10 years, while roughly the same proportion of data scientists in China have less than 5 years of experience. As of 2017, fewer than 30 Chinese universities produce AI-focused experts and research products.[50]:8 Although China surpassed the United States in the quantity of research papers produced from 2011 to 2015, the quality of its published papers, as judged by peer citations, ranked 34th globally.[51] China is, however, making efforts to address these deficiencies, with a particular focus on the development of military AI applications. Indeed, the Beijing Institute of Technology, one of China's premier institutes for weapons research, recently established the first children's educational programme in military AI in the world.[52][46]

Ethical Concerns[edit]

For the past years, there are emerging discussions about AI safety and ethical concerns in both private and public sectors. In 2021, China’s Ministry of Science and Technology has published the first national ethical guideline, ‘the New Generation of Artificial Intelligence Ethics Code’, on the topic of AI with specific emphasis on user protection, data privacy, and security[53]. This document acknowledges the power of AI and quick technology adaptation by the big corporates for user engagements. The South China Morning Post, a state-backed media, reported that human shall remain in full decision-making power and rights to opt-in/-out[54].  Prior to this, the Beijing Academy of Artificial Intelligence has published the Beijing AI principles calling for essential needs in long-term research and planning of AI ethical principles[55]. This document addresses five key AI ethical topics including ‘security and privacy’, ‘safety and reliability’, ‘transparency’, ‘accountability’, and ‘fairness’[56].


Data security has been the most common topic in AI ethical discussion worldwide, and many national governments have established legislation addressing data privacy and security. The ‘Cybersecurity Law of the People’s Republic of China’ has been enacted in 2017 aiming to address new challenges raised by AI development. This document includes Sections about cybersecurity promotion, network operation security, information security, emergency responses, and legal responsibility[57].  In 2021, China’s new Data Security Law (DSL) was passed by the PRC congress setting up a regulatory framework classifying all kinds of data collection and storage in China[58]. This means all tech companies in China are required to classify their data into categories listed in DSL and follow specific guidelines on how to govern and handle data transfers to other parties[59].

Leading Industrial Players[edit]

Leading AI-centric companies and start-ups include Baidu, Tencent, Alibaba, SenseTime[60][61] and Yitu Technology.[60][61] Chinese AI companies iFlytek, SenseTime, Cloudwalk and DJI have received attention for facial recognition, sound recognition and drone technologies.[62]

In World Artificial Intelligence Conference 2019 hosted in Shanghai, the Ministry of Science and Technology announced the latest list of Chinese firms that were selected to China’s AI ‘national team’ with assigned specialized AI sectors. China has expanded its national AI team three times since the initial announcement in 2017. The number of firms involved has also expanded from five to fifteen:

  • In 2017, Alibaba Cloud (阿里云), Baidu (百度), Tencent (腾讯), iFlytek (科大讯飞) are the initial four firms in China’s national AI team
  • In September 2018, SenseTime (商汤) became the fifth member in the team
  • In 2019, ten more companies are added into the list, including Yitu (依图) and Xiaomi (小米)
Year Company Designated AI Specialty
2017 Alibaba Cloud (阿里云) Smart City Brain
2017 Baidu (百度) Autonomous Vehicle
2017 Tencent (腾讯) Medical Intelligence
2017 iFlytek (科大讯飞) Voice Recognition
2018 SenseTime (商汤) Intelligent Vision
2019 Yitu (依图科技) Visual Computing
2019 Minglamp Technology (明略科技) Intelligent Marketing
2019 Huawei (华为) Software and Hardware
2019 Pingan (中国平安) Financial Intelligence
2019 Hikvision (海康威视) Video Perception
2019 JD.com (京东) Smart Supply Chain
2019 Megvii (旷世科技) Visual Perception
2019 Qihoo 360 (奇虎360) Security and Smart Brain
2019 TAL Education Group (好未来) Education
2019 Xiaomi (小米) Home Automation

Scholar Critics[edit]

An article published by the Center for a New American Security concluded that "Chinese government officials demonstrated remarkably keen understanding of the issues surrounding AI and international security...this includes knowledge of U.S. AI policy discussions." and recommended that "the U.S. policymaking community similarly prioritize cultivating expertise and understanding of AI developments in China" and "funding, focus, and a willingness among U.S. policymakers to drive large-scale necessary change."[63] An article in the MIT Technology Review similarly concluded: "China might have unparalleled resources and enormous untapped potential, but the West has world-leading expertise and a strong research culture. Rather than worry about China’s progress, it would be wise for Western nations to focus on their existing strengths, investing heavily in research and education."[64]

Some experts believe that China's intent to be the first to develop military AI applications may result in comparatively less safe applications, as China will likely be more risk-acceptant throughout the development process. These experts stated that it would be unethical for the U.S. military to sacrifice safety standards for the sake of external time pressures, but that the United States’ more conservative approach to AI development may result in more capable systems in the long run.[46]:23

See also[edit]

References[edit]

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Category:Artificial intelligence Category:Economy of China

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