Artificial intelligence promises to be a paradigm shift for many applications from manufacturing to finance, and from defense to education.  Given the vast potential, focus on AI has sharpened around the world, including in China.  Decision makers in Beijing and around the country are paying attention and have begun shaping a legal and policy regime that favors the development of AI.

Research and investment in AI on both sides of the Pacific has led to cross-border collaboration – both in terms of talent and capital.  Last December, Google announced that it will open an AI research center in Beijing, in part to leverage AI talent there.  A month earlier, San Diego-based Qualcomm announced a strategic investment in SenseTime, a Chinese company specializing in facial-recognition software.  China’s technology giants, including Tencent and Baidu, already have AI research labs in the US.  And Didi Chuxing, China’s leader in ride-hailing technology and which has a lab in Silicon Valley, on January 26 officially launched its “AI Labs” research initiative, boasting a team of over 200 AI scientists and engineers.

But how does the Chinese legal and regulatory environment affect the development of these technologies?

Last summer, the State Council released “A Next Generation Artificial Intelligence Development Plan” (“Plan”), which sets the goal of having China become the world leader in AI by 2030.  The Plan divides China’s AI goals into three “Strategic Objectives” to be met by 2020, 2025, and 2030, respectively. By 2020, the Plan aims to bring China’s AI up to global standards, with important achievements in AI applications and theory, as well as a “core AI industry” of at least 150 billion RMB. By 2025, it aims to begin the establishment of AI laws and regulations, as well as a core AI industry of at least 400 billion RMB, including sectors such as intelligent manufacturing, medicine, agriculture, and urban planning. Finally, by 2030, the Plan aims for China to become the world’s leading AI developer, with AI deeply embedded in daily life and a core industry exceeding one trillion yuan.

To accomplish these quantitative goals, the Plan outlines a number of “focus tasks” that touch on the application of AI to social, economic, and national security challenges. The Plan also lays out several “guarantee measures” intended to support and guide the development and application of AI, such as necessary laws and regulations, ethical frameworks, and resource allocation principles. While the Plan is scant on concrete details, its ambitious agenda and discrete policy tasks point toward significant industry, legal, and regulatory developments in the near future.

Building on the State Council’s Plan, on December 13, 2017 the Ministry of Industry and Information Technology (“MIIT”) released the “Three-Year Action Plan to Promote the Development of a New Generation of the Artificial Intelligence Industry (2018-2020)” (“Action Plan”).  The Action Plan encourages efforts in key areas, including autonomous vehicles, intelligent service robots, intelligent unmanned aerial vehicles, medical image diagnosis assistance systems, video and imaging identification systems, intelligent voice interactive systems, intelligent translation systems, and smart home products.  It also calls for making breakthroughs in “core foundational” technologies, including intelligent sensors, neural network chips, and open source platforms.  Finally, the Action Plan calls on the government and the financial industry to support AI initiatives.

Even at this early stage, there are signs that these initiatives are moving forward.  Bloomberg reported last October that Megvii Inc., a Chinese facial recognition company, had set a new record for the largest single-round investment in an AI company, raising $460 million from investors, including one of China’s largest state-backed venture funds.  In early January, the city of Beijing announced plans to build a $2.12 billion (13.8 billion RMB) AI development park and also released plans for a dedicated zone to test autonomous vehicles.  And the Nieman Foundation reported that China’s state news agency, Xinhua, will be rebuilding its newsroom to integrate AI into the newsmaking process.

At the same time, the Government is attempting to reconcile an apparent tension between citizens’ increased privacy awareness with flexible policy frameworks that allow AI to flourish.  Because access to data is a critical resource for developing AI, including by machine learning, efforts in data protection and cross-border transfers bear on these developments.  See our post here on recently issued legal frameworks to protect citizens’ information.

With official encouragement like this, China’s AI prowess is advancing.  Upcoming posts in this series will cover how the Chinese Government develops local regulations and national “standards” that serve as experiments for policy innovation in China.

Photo of Ashwin Kaja Ashwin Kaja

With over a decade of experience in China, Ashwin Kaja helps multinational companies, governments, and other clients understand and navigate the complex legal and policy landscape in the country. He plays a leading role in Covington’s China international trade and public policy practices…

With over a decade of experience in China, Ashwin Kaja helps multinational companies, governments, and other clients understand and navigate the complex legal and policy landscape in the country. He plays a leading role in Covington’s China international trade and public policy practices and, outside of Covington, serves as the General Counsel of the American Chamber of Commerce in China.

Ashwin helps clients solve acute problems that arise in the course of doing business in China and position themselves for longer-term success in the country’s rapidly evolving legal and policy environment. He is an expert on Chinese industrial policy and has worked on matters related to a wide range of sectors including technology, financial services, life sciences, and the social sector. Ashwin has also counseled a range of clients on data privacy and cybersecurity-related matters.

As the General Counsel of the American Chamber of Commerce in China (AmCham China), Ashwin serves as a senior officer of the organization and as an ex officio member of its Board of Governors, supporting nearly one thousand member companies in developing their businesses in China and advocating for their needs with China’s central and local governments.

Photo of Yan Luo Yan Luo

Yan Luo advises clients on a broad range of regulatory matters in connection with data privacy and cybersecurity, antitrust and competition, as well as international trade laws in the United States, EU, and China.

Yan has significant experience assisting multinational companies navigating the…

Yan Luo advises clients on a broad range of regulatory matters in connection with data privacy and cybersecurity, antitrust and competition, as well as international trade laws in the United States, EU, and China.

Yan has significant experience assisting multinational companies navigating the rapidly-evolving Chinese cybersecurity and data privacy rules. Her work includes high-stakes compliance advice on strategic issues such as data localization and cross border data transfer, as well as data protection advice in the context of strategic transactions. She also advises leading Chinese technology companies on global data governance issues and on compliance matters in major jurisdictions such as the European Union and the United States.

Yan regularly contributes to the development of data privacy and cybersecurity rules and standards in China. She chairs Covington’s membership in two working groups of China’s National Information Security Standardization Technical Committee (“TC260”), and serves as an expert in China’s standard-setting group for Artificial Intelligence and Ethics.