Chinese companies are ahead of their time in adopting generative artificial intelligence (AI), a technological leap that experts say could upend global trade and give China a crucial advantage.
This significant lead, combined with China’s dominance in AI patent filings and strong government support, could reshape global market dynamics and give Chinese companies an edge in sectors ranging from e-commerce to manufacturing.
As the AI race heats up between the world’s two largest economies, the implications for international trade, technological innovation, and economic competitiveness are profound, potentially straining U.S.-China relations and forcing a reevaluation of regulatory approaches to AI development.
“The Chinese government is devoting massive resources to AI research and development,” Robert KhachatrianCEO of Freight Right Global Logisticstold PYMNTS. “For example, in 2020, they unveiled a $1.4 trillion investment plan for AI and other high-tech industries over five years.”
The Biden administration recently introduced a policy requiring federal agencies to assess and manage potential risks associated with artificial intelligence (AI) systems. And European leaders stunned The alarm over lagging innovation has been sounded as the head of Norway’s oil fund said US companies are outpacing their European counterparts in technological advances, prompting calls for EU economic autonomy.
China’s Domination of Artificial Intelligence: A Real Storm
A study by an American artificial intelligence and analytics software company SAS And Coleman Parkes Research The study found that 83% of Chinese respondents across industries are using generative AI, compared to just 65% in the United States and a global average of 54%. This lead in AI adoption, which spans industries from banking to manufacturing, could have significant business implications, potentially reshaping global market dynamics and competitive advantages.
The survey, which surveyed 1,600 decision-makers from 17 countries and regions, covered the banking, insurance, healthcare, telecommunications, manufacturing, retail and energy sectors. It is the latest indication that China is making rapid progress in AI technology, which has attracted global attention after the U.S. company OpenAI launched ChatGPT in late 2022.
China’s progress goes beyond adoption rates. recent report China is also leading the patent race for generative AI, with more than 38,000 patents filed between 2014 and 2023, compared to 6,276 filed by the United States during the same period, according to a study by the United Nations World Intellectual Property Organization.
The regulatory landscape in China has played a crucial role in the success of AI.
“China’s approach to regulation has, unsurprisingly, taken a China-first approach,” Nicolas Riouxtechnical director of Labvivaan artificial intelligence procurement technology company for life sciences, told PYMNTS. “Regulations are being implemented to ensure local market dominance in the Chinese market for local companies. This gives local companies, aligned with regulators, an unfair advantage over less aligned foreign and local competitors.”
The implications of China’s leadership in AI could be far-reaching.
“China’s lead in AI could give its companies a significant advantage in sectors like e-commerce, manufacturing and finance, leading to more efficient operations, cost savings and innovative products,” Khachatryan said.
Some observers believe it is difficult to overestimate the importance of AI dominance.
“I compare a nation having economic control over emerging AI technologies to having an internal combustion engine. It will have just as much impact, if not more,” Rioux said.
This technological advantage could also impact global trade dynamics, which could strain relations between China and other countries, including the United States. The competition could lead to increased conflicts over technology and intellectual property.
Despite China’s advances, the United States is not sitting idly by. In recent months, the U.S. government has stepped up efforts to curb the export of advanced artificial intelligence technologies to China. These measures are aimed at slowing China’s progress in developing artificial intelligence and maintaining America’s technological edge.
In October 2022, the Biden administration imposed sweeping export controls on advanced computer chips, specifically designed to hamper China’s ability to develop robust AI systems. More recently, the United States has been considering additional restrictions on exporting AI software and cloud services to China.
These measures reflect Washington’s growing concerns about China’s rapid advances in artificial intelligence and their potential implications for national security and economic competitiveness. However, as the survey results and expert opinions suggest, the effectiveness of these measures in slowing China’s AI momentum remains to be seen.
How will the United States react?
For American businesses and policymakers, the stakes are high.
“The best response to this situation, from the U.S. perspective, would be to ensure that any regulatory action taken against domestic AI players is aimed at helping these companies gain economic advantages over efforts by competing countries,” Rioux said. “To succeed, we must minimize intrusion into U.S. companies and not put political and social agendas ahead of growth-oriented regulation.”
These developments come despite efforts by the United States to curb China’s technological advances, highlighting the intense competition between the world’s two largest economies in the AI sector. As companies around the world race to harness the transformative power of AI, China’s lead raises questions about future innovation, productivity gains, and market dominance in an AI-driven economy.
