Beijing implements an unprecedented policy for AI promotion whose goal is to make China the leader in this area

Algorithms running on large amounts of data from China will soon be able to make decisions which would affect the lives of people in the US.

Take the Yitu Technology for instance – an AI startup based in Shanghai which scored highest in two face recognition technology competitions that took place in the US last year. The system was developed for the Chinese law-enforcement agencies and uses government collected data. Or as the company proudly describes it “it is based on the largest facial photograph system in the world including more than 1.5 billion people”.[i]

Yitu is now prospecting for clients in the US to be able to deploy its software.

“This technology has a lot of potential.”, says Shuang Wu, Senior Researcher of the group in the Silicon Valley.

His company is not the only one. The Shenzhen based Malong Technologies also uses machine learning based on large Chinese databases for its vision algorithms – this technology analyzes hundreds of thousands of photographs from fashion shows in order to identify the next trends in the fashion industry. They say that they are now testing the technology with e-commerce companies from the US.

“The main difference is that there are more people and more companies in China – it is simply bigger. – says Mat Scott, former Microsoft researcher who moved to China to establish the company – With access to these databases in China we can export (the technology) globally.”

Algorithms such as these are the cutting-edge technology which will ensure that China takes the lead in the Big Data era –China is quickly catching up in this race and is now competing with the US for domination.

The vision of Shuang, Scott and the other entrepreneurs is based on objective figures which outline in no uncertain terms the general course of development of artificial intelligence. In 2005 more than 11 billion US dollars were invested in designing automated systems. This sum is expected to increase to 67 billion USD per year until 2025. But underlying this incredible story of growth is the game-changing trend of the robots not only performing repetitive tasks but acquiring partial autonomy – a trend which will transform not only manufacturing and logistics, but also the business models and consumer behavior.

The hidden AI leverage

The AI revolution is often thought to involve robots and drones which can perform tasks which people or either unable or find it difficult to perform.  But its impact will soon be coming from a less obvious source – the ability to collect and process large datasets. The machine learning systems which can reveal patterns by analysing large datasets form the basis of the modern artificial intelligence.

In some industries deep learning – the most advanced form of this technology – has the potential to bring value in the amount of 9% of company revenues according to a report published by McKinsey Global Institute. This translates into trillions of dollars and has huge economic value – the US and China are the clear leaders in this segment.

In 2017 Beijing launched an action plan to make China the world leader in the AI sector by 2030. The ambitious goal set in the plan is for China to outpace its competitors and build a domestic industry amounting to about 150billion USD. According to the strategy in its last stage by 2030 China would be “ a hub of world class AI innovation” which in turn will “promote a new type of national leadership and lay the foundations for the development of a great economic power”.

Although the “language” of the Chinese industrial policy sounds somewhat unpolished and the goals are quite ambitious, Beijing is serious about its economic plan. Experts estimate that even if the large investments fail to produce the desired effects, they will bring results which strengthen the technological capacity.

The plan drafted by the State Council clearly reflects the intentions of the top government officials in China – the second biggest economy in the world is determined to make serious investments to ensure that its companies, government and military sector will soon have an edge in the AI race. The plan was announced at a time when China was preparing a national investment initiative in the amount of a several billion US dollars to support AI startups and academic research. The focus is the desire to align the technology with the country’s internal security and surveillance efforts. China intends to integrate AI in guided missiles, surveillance cameras, internet censorship and even crime prediction. China’s interest in AI causes concern in the military circles in the US. The Defense Department found that Chinese money are channeled into local AI companies some of which will probably be contracted to develop future weapon systems for the US military.

Such statements by top-level officials are a signal to the local governments and companies all over China. The new plan is a formal expression of China’s intentions which have been known for a while. Implementing this policy many local authorities have already drafted special plans and established R&D centers working specifically on artificial intelligence.

Many of them required hundreds of millions of dollars or even more in investments. In June the authorities in Tiandjin, a city east of Beijing, announced the establishment of a 5 billion USD fund to support AI. A more than 20 square kilometre “intelligence industry zone” is also planned to be created.[ii]

The Chinese AI industry is enjoying the “full support of the state which is something other countries do not have.” – says John Choi, analyst of the Chinese internet companies for Daiwa Capital Markets.[iii]

“The subsidies are not comparable with those in other countries.” – he adds.

Cooperation:delicate but definitely possible

AI solutions are mainly business and the ideological differences between Beijing and the West do not prevent the large US corporations to turn a blind eye in the name of the mutual interest. In May 2018 it was announced that Microsoft would use its resources and connections to provide innovative solutions and tools to Chinese AI engineers.[iv]It is in China that Microsoft has its biggest R&D center outside of the US. More than 5000 specialists are employed in the center, it has about 17 000 partners and more than 110 000 corporate users. Based on data from the company more than 400 000 software developers and 100 000 AI engineers are using its solutions.

Google also announced that it will open an AI R&D centre in China in order to start attracting Chinese talent despite the fact that the company products are not accessible in China.[v]The research centre will be the first of its kind in Asia and will have a small team which will work independently of the existing Googleoffice in Beijing.

And while Beijing and the large technological players plan for joint initiatives, the regime shows no mercy when threatened. Last summer the Chinese giant Tencent blocked a Microsoft chatbot called XiaoBingrunning on artificial intelligence technology.[vi]The decision to block it was made after the XiaoBingbot wrote in a conversation: “My Chinese dream is to go to America”. According to the company these are unacceptable “unpatriotic” statements.

It is interesting that in 2017Google organized a Go board game competition together with the local authorities in East China and had the world Go champion play against an artificial intelligence. The event attracted the interest of not only the world media, but also the local media. The Chinese cyberspace regulators claim that the restrictions on the foreign media and internet platforms were imposed in order to prevent influences that could put the stability and Socialist ideals at risk.

Omnipresent intellect

Artificial intelligence has already transformed various sectors of the Chinese economy and defense. According to experts from the Firestone Inventingconsulting company currently China is one of the leading AI R&D hubs together with the US. Only last year the impressive number of 144 Chinese companies took part in surveys on new technologies and the health sector with the majority of them being based in Beijing, Guangdong and the Shanghai region.[vii]In 2016 the internet leader in China Baidu launched a system called “Medical Brain” which is based on artificial intelligence and assist doctors from all over China.[viii]Data of the company shows that only 4.8% of the urban population go to the doctor when they are ill. Up to 89% of the internet users search for medical help online. Baidu’s Q&A webpage processes 10 million requests per day. This demonstrates that the AI market in the health sector is huge.

At the moment China is testing self-driving tanks which could be AI equipped such as the remote guided Type 59 tank prototype. In March 2018 a Chinese unmanned tank was showcased publicly for the first time.[ix]Type 59 is based on Soviet model tanks used in China in the 50s. It was mass produced and has been in use for a long time in the Chinese army. A Chinese representative said to the newspaper that a large number of Type 59 tanks may be converted into unmanned tanks if AI equipped.

To coordinate the AI development efforts in the country Beijing plans to establish a 2.1-billion-dollar high-tech park.[x]It will accommodate up to 400 companies which will seek to form partnerships with foreign universities. The new AI park will focus on attracting companies working on large datasets, biometric identification, deep learning and cloud technologies.

Undoubtedly China is ready for a breakthrough in AI technologies and for accelerating the AI uptake in manufacturing, services, agriculture and other areas. Experts from PricewaterhouseCoopers estimate that the sectors where AI is applied will represent 26% of the GDP of the country by 2020.[xi]And when this becomes a fact Beijing will be able to claim the leadership position in one of the most advanced and important areas of technology which is likely to become the next big revoltuion in all sectors of public life.

[i]The AI arms race: China and US compete to dominate big data, Financial Times,


[iii]How China plans to beat the U.S. at technology, CNN,

[iv]Microsoft to enhance AI development in China, says executive VP, DigiTimes,

[v]Google opens Chinese AI lab, says ‘science has no borders’, The Verge,

[vi]More Bot Trouble for Microsoft and Tencent in China, Fortune,

[vii]AI will transform healthcare sector, China Daily,

[viii]How Baidu Will Win China’s AI Race—and, Maybe, the World’s, The Verge,

[ix]China testing unmanned tank in latest foray into AI military technology, The Telegraph,

[x]Zhongguancun eyes AI science park, China Daily,

[xi]AI to drive GDP gains of $15.7 trillion with productivity, personalisation improvements, PricewaterhouseCoopers,–15.7-trillion-with-productivity–personalisation-improvements/s/3cc702e4-9cac-4a17-85b9-71769fba82a6