In the race to become the leader in artificial intelligence, China and the United States are ahead of the rest of the world. What does this mean for other countries? Will these two global tech giants reap the economic dividend of AI on their own?
The answer is no. ”There is a huge opportunity for the smaller, nimble economies of Asia (to borrow from Isaac Newton) to stand on the shoulders of the two giants in order to reap the benefits of applying the AI in their own industries.
Of course, it is fair to recognize the supremacy of the United States and China. The AI research infrastructure they built has resulted in an unassailable advantage over other competing countries in Europe, North America and Asia. This is due to a number of factors: the depth of their capital markets, the richness of their skill base, the dominance of their cash-rich technology companies, and the data-generating capacity of their vast populations.
However, the economic dividends of AI aren’t just for researchers. Most of the economic value promised by the AI revolution will be captured through innovation and the application of AI technologies in industry. Businesses and policymakers around the world should recognize that the AI dividend is within reach.
AI is fundamentally open science. It is fierce and open competition in academia that drives global research forward. The relatively open borders to data flows and digital services mean that the latest technological advancements in one part of the world are fairly quickly made available and adaptable to businesses everywhere else.
When it comes to the application of AI in industry, ambitious economies can learn from China’s achievements. China has successfully established a culture of technology adoption and data sharing in consumer interactions and business practices that give it a distinct advantage.
There are three factors behind this. The first is the openness of Chinese companies to technological trial and error. Chinese companies have shown a fundamentally positive and flexible attitude to digital solutions over the past two decades, which has helped accelerate the integration and innovation of AI. International surveys of leaders, such as the World Economic Forum’s Future of Jobs report, consistently rank China first (or nearly so) in the attitude of its people towards adopting the IA.
Second, the adoption of the technology is driven by China’s strong and ambitious policy framework. The country’s 14th five-year plan (2021-25) crystallizes the national goal of “deep integration” of the Internet, big data and AI in various industries. And the Chinese government has recently started to tighten regulations on the development of AI and Internet companies, but the repercussions of China’s largely positive political stance can be seen in the current investment rate.
One example is the state-funded, $ 2.1 billion AI-driven technology research park on the outskirts of Beijing. More generally, China represents nearly 40% of new industrial robot installations in the world, more than three times more than Japan, second.
And third, China has established a world-class skills base not only to develop AI solutions, but also to integrate them into industries. The rapid expansion of China’s computer and engineering graduate pool in recent years has been a central pillar of economic planning. China ranks third in the world for “AI skills penetration,” according to the Stanford University AI Index report. Which means AI skills are 1.4 times more likely to be required in Chinese professions than the global average.
These three factors have created a virtuous circle in China. Fast-growing Chinese companies are bringing AI products to market and competing for custom AI solutions to fit Chinese scenarios. These solutions are adopted by receptive companies, ready to test, adopt and quickly integrate AI products into their operations. In doing so, they in turn generate large amounts of data, which enables developers to constantly and nimbly improve their AI products, and lead to innovative spillover applications in different industries.
In addition, the growth of the domestic market justifies high investments in the technological industry. The economy-wide openness to AI is indirectly fueling Chinese innovation in high-tech computer chip manufacturing and software development.
Other Asian countries can benefit from China’s recent experience with AI, continuing their own virtuous circle of AI integration. This means cultivating an open attitude towards the adoption and integration of AI within the industry, with an emphasis on the development and retention of technological skills, as well as being open to foreign investment and technology trade. Chinese tech companies are major sources of funding for tech entrepreneurship in the wider Asian continent, which in turn drives valuable knowledge spillovers to the region.
The economic dividend of AI is not a price contested by two international heavyweights. This is a universal economic opportunity that all Asian countries can harness and which will shape the region’s competitive landscape over the next decade.
The author is Director of Economic Consulting, Asia, at Oxford Economics. Opinions do not necessarily reflect those of China Daily.