China unveiled a plan to develop the country into the world’s primary innovation centre for artificial intelligence in 2017. It identified AI as a strategic industry, crucial for enhancing economic development, national security, and governance.
The Chinese government’s command innovation approach towards AI development is crafting a political economy that tolerates sub-optimal and even wasteful outcomes in the quest for expanding the scale of the industry. Consequently, the industry is likely to be plagued by concerns about overinvestment, overcapacity, quality of products, and global competitiveness.
In addition, increasing friction over trade with other states and President Xi Jinping’s turn towards techno-nationalism along with tightening political control could further undermine China’s AI industry. Before we dive into the challenges, here’s some background.