1992 Poster commemorating Deng’s visit to Shenzhen. Photo retrieved from asianstudies.org
By Hasna Naseer
The vast potential and promise of Artificial Intelligence (AI) and machine learning have caught the attention of the world, and China is no exception. China’s government is eager to act decisively and reap the benefits of these burgeoning technologies. It publicly announced a new comprehensive strategy to develop and regulate AI with its A Next Generation Artificial Intelligence Development Plan (2017) and has steadily released increasingly fleshed out pledges and guidelines ever since. Although the state documents remain vague regarding specifics and are grandiose in terms of ambition, their references to decentralization, private sector investment, and input from nongovernmental actors offer insight into China’s bureaucratic positioning regarding AI development. These plans are consistent with the larger scheme of allocation of urban decision-making since the institution of Deng Xiaoping’s reforms in 1978.
State intervention in national economic development varies not in terms of usage, but in terms of degree, from country to country. What is noteworthy in the People’s Republic of China and its socialist planned economy, however, is the lead role played by local (counties, towns, and villages), rather than central, communist officials in the rapid rural industrialization process. The Chinese state simultaneously planned the economy on the macro level, yet provided the opportunity for local institutions to embrace liberal economic reforms. During the immediate post-Mao years, the carefully balanced level of state intervention in China’s rural industry explains the “timing of the take-off, dominance of publicly owned township and village enterprises over private ones,” and how “peasants obtained capital and resources to fuel China’s economic takeoff when personal savings were meager and the market [was] in its infant stage of development.”[1] The Chinese state’s policy of encouraging greater economic liberalism at the local level created the conditions for an explosion of private capital and economic development in the nation.
In the 1980s, China experienced tremendous economic growth without simultaneously enduring political upheaval. In the post-Mao Zedong era, state controlled socialist economic planning was combined with a focus on spurring regional/local privatization, especially in the information technology sector and other research-based industries. The goal was to produce new technological innovations. Even after the transformation to a socialist market economy, the methods China used to achieve economic growth remained consistent with Marxist ideals. Amidst the onset of China’s socialist transformation, the Chinese Communist Party’s main goals were to “emancipate and develop productive forces, to advocate independent innovation, and to build an innovative country” based on the Marxist notion of political economy; that is development driven primarily by revolutionary and active market forces.[2] Although innovation was sought through high-quality economic development instead of high-speed economic growth like in the past, Deng’s reforms maintained that innovation was still a leading factor in development. To achieve Deng’s preferred type of development, the government must “vigorously cultivate new driving forces and a range of innovative enterprise[s], facilitate the transformation from China as a manufacturing power to China as one of the world’s leading innovators, and to shift the emphasis from the speed of China’s growth to its quality.”[3] Standing firm in its adherence to Marxist-Leninist tenants, China refused to follow the Soviet Union in abruptly privatizing and transforming its economic system in the wake of global pressures. Instead, China continued its system of state-owned enterprise while gradually introducing reforms regarding fiscal flows and property rights. The record-breaking growth of China’s economy ever since calls into question the narrative that credible commitment of the state to exchange is a necessary precondition for international economic competitiveness.
China’s sudden economic transformation owes most of its success to local, rather than central, actors. It is not a forgone conclusion that reform initiated at the top can seamlessly translate into implementation at the bottom. Local officials exercise distinct autonomy from the state, and their responses (or assessment of the incentives and constraints placed upon them) to central initiatives are what ultimately set economic growth into motion. At the start of reform, localities were provided leeway by the state when it came to managing collectively owned enterprises. Rising to the challenge, those on the ground and familiar with the terrain created the conditions for economic growth and speculation, by allocating risk and profit among various entities, despite the limited financial resources held among the peasantry. The success of this strategy of involving not just the state, but also local actors in high-level decision making was carried out not only into the following decade, but continues to be a strategy employed by the Chinese communist party in the present. The current manifestation of China’s advance towards economic growth through reformed development has taken form through its well-publicized ambition in high-technology areas, such as AI.
By the 1990s, local governments shifted from strictly developing collectively owned enterprises to promoting the private sector, even at the expense of the former. This shift was encouraged by the PRC’s efforts to achieve high-quality economic development. Soon after, by the middle of the decade “county governments began to play a more interventionary role by prioritizing larger-scale enterprises in a local developmental program called the Second Pioneering Initiative.”[4] Major undertakings were now no longer solely under the purview of the state. Capital was supervised by local actors who were empowered to become the principal forces of implementing infrastructure development projects of national significance. Yet, the influx of private enterprise was by no means followed by a wrestling of power away from the party cadres and towards the growing and no longer shunned entrepreneurial elite. Instead, “the degree to which the local corporate state has been able to restrain the private sector from becoming an independent economic class points to the emergence of a corporatist rather than a free market system, at least at the local level.”[5] Looking at the economic doctrine of current Chinese President Xi Jinping (2013-) helps us understand this political phenomenon.
Since 2017, General Secretary of the Chinese Communist Party, Xi Jinping has guided the ideology of China’s quest for greater economic and social achievement. The economic ideas posited by Xi in his work, Thought on Socialism with Chinese Characteristics for a New Era, which have now been infused in the Chinese constitution, are consistent with a Marxist political economy. For example, Xi states “it is necessary to maintain and perfect the socialist basis of the economic system, steadfastly consolidating and developing the publicly owned economy, while unswervingly encouraging, supporting, and guiding the development of the nonpublic economy.”[6] Given its contemporary nature, the ideas posited in Xi Jinping Thought primarily revolve around scientific and technical innovation. These ideas are apparent in China’s plans for AI development through numerous state documents.
In the same year that Xi Jinping Thought was released, China’s State Council issued the 28-page document, A Next Generation Artificial Intelligence Development Plan, on July 20, 2017, which set broad goals for the country’s approach to developing AI technology and related applications up to the year 2030. The development plan contained Marxist rhetoric. It argued, “the proportionate distribution of social labor is the basic law for coordinating the development of the whole national economy and the contradictory relationship between production and social demand.”[7] To achieve these goals, the Next Generation plan calls for new policies to be implemented at the state level, while emphasizing continued coordination between various public and private interests. Coordinated development, or rather utilizing equally all tools of innovative development at the state’s disposal, such as human labor, capital stock, and social wealth, ensures maintenance of domestic stability, high quality development promotion, and, most importantly, social progress. Since China is not constrained by shifts in policy goals dependent on the reigning political party, the central government document lays out comprehensive, long-term, whole-of-government directives which regulate the actions of government departments, universities, research institutes, and the private sector. Although important in terms of initial formalization of a national-level focus, local actors had already begun implementing programs to encourage the development of AI.
Prior to the Development Plan’s release, local governments and companies had launched various sub-national AI planning projects as a result of the Chinese Communist Party’s efforts to give greater economic autonomy to local institutions. Despite being carried out at the local level, these efforts could be very impressive. For example, “the government of Tianjin, an eastern city near Beijing, said it planned to set up a $5 billion fund to support the A.I. industry [and] set up an ‘intelligence industry zone’ that will sit on more than 20 square kilometers of land.”[8] The fact that state plans came after local action in terms of AI development projects is not surprising. For instance, interactions between entrepreneurs and the state routinely facilitated private sector development pre-central authorization, “which in turn attracted elite-level attention in sanctioning, post hoc, changes in the country’s economic and political institutions.”[9] China’s central government routinely looks towards economic innovations at the local level for inspiration on what economic policies may succeed before implementing projects at the national level.
China’s approach to AI as stipulated in the Development Plan is not defined by a monolithic nature popularly attributed to unitary states. Although the Chinese Communist Party authored document offers an obligatory nod to the socialist system’s advantages regarding successfully implementing major undertakings, it ultimately calls to “give rein to the guiding role of finance administration input and policy incentives and the dominant role of the market in allocating resources” in matters relating to AI development.[10] These calls for decentralization are consistent with the message propounded by Xi that the development of socially productive forces, through the instruments of science and technology, is achieved by easing regulatory controls. These regulations, the document argues, stifle innovation, instead of emphasizing the talents, visions, and abilities of people leading relevant industries, and understanding that self-reliance regarding research and development is a necessary precondition for a country to become internationally competitive regarding technological innovation.[11] The Development Plan, however, calls for the central government to maintain a substantial role in “planning and guidance, policy support, security and guarding, market regulation, environmental construction, [and] the formulation of ethical regulation,” causing local governments, academic laboratories, private companies, and bureaucratic agencies to compete among themselves in order to exert influence over the administrative gaps in China’s AI policy and further their own interests in the process.[12] The historic Development Plan calls for empowering the voices of experts by stimulating competition between various groups in the name of acting in accordance with Marxist notions of productive forces.
The strategic objectives of the State Council’s Development Plan signal its high expectations for AI development. The objectives, which include improving China’s overall technology and application of AI “to be in step with globally advanced levels” by 2020, enabling AI to become “the main driving force for China’s industrial upgrading and economic transformation” by 2025, and “making China the world’s primary AI innovation center” by 2030, reveal the paramount importance the State Council places on the country’s AI development.[13] However, the strategy to achieve such goals, differs from China’s past efforts to support and intervene in the innovation of other emerging technologies due to AI’s potential utilization in an array of fields ranging from agriculture, business, and education, to energy management, military, and security. Thus, “the breadth of actors involved is much wider than the other technologies, and as a result, internationally-facing, private tech giants and vigorous startups are leading players in driving innovation in AI.”[14] Yet, China’s increasingly active relationships with liberal economies should not be viewed through the dated lens of China adopting other (read capitalist) economic models, rather this economic liberalization remains consistent with Chinese notions of a socialist economy. Indeed, according to the principles of Marxist political economy, “the opening up of a country’s economy to the outside world, when certain conditions are ready, is beneficial to the economic growth of the country and the world, allowing an optimal allocation of resources.”[15] At this point in time, China has steadfastly proven itself capable of maintaining political-economic independence while still engaging in the capitalist global trade market. Thus, in China, engaging in the world economy is seen as mutually beneficial. Xi Jinping Thought expands on this view, advocating for an increase in both the scope and degree of China’s trade with the rest of the world, provided this trade remains on China’s terms and to its benefit. The goals illustrated in the Development Plan appear to indicate China’s focus on upgrading the quality and scale of its exports, along with encouraging foreign investment in its domestic industries, will help stimulate China’s AI campaign.
At the time of the document’s release, the United States was, and remains, the world’s AI leader in terms of talent, research, development, and hardware.[16] One goal of the State Council’s Development Plan is to remedy that fact. Regarding talent, the plan addresses recruitment and cultivation of researchers through a combination of national-level and local-level approaches to entice talent to work in China with its tech giants, who recruit foreign researchers. Regarding development, which involves cooperation between AI companies, startups and related investment capital to create a strong and innovative industry, the Chinese government cultivates an AI venture ecosystem and invests in commercial AI by “disbursing funds through ‘government guidance funds’ (GGF) set up by local governments and state-owned companies.”[17] China’s investment vehicle of GGFs and mode of public-private partnerships ensures policy support and ample resources for the state’s AI commercial sector policy goals. In order to entice private investment and indicate state commitment towards the AI industry, the government sponsors of GGFs oftentimes provide incentives, such as forgoing interest payments or assuming other investors’ losses, a tactic similar to American government subsidies of valued industries.
Since the release of the 2017 Development Plan, there have been several follow-up central government documents that double down on China’s commitment to becoming the world’s leader in AI technology. The first, the Chinese AI Alliance Drafts Self-Discipline “Joint Pledge,” released on May 31, 2019 (available to the general public until June 30) by the Artificial Intelligence Industry Alliance (AIIA), is a joint pledge between government bureaucrats/officials, top Chinese tech firms such as Baidu, Alibaba, Tencent, Hussein, ZTE, 360, and top Chinese universities on AI ethics, safety, standardization, and engagement in the AI industry. As the most substantial document on AI ethics since the Development Plan, the Joint Pledge is more concerned with the specifics of development than its predecessor, while renewing calls for a partnership between the private and public sectors. Regarding basic principles of government responsibility, the Joint Pledge’s commitments include ensuring that “AI systems operate securely/safely, reliably, and controllably throughout their lifecycle.”[18] The relatively progressive promises of China to ethically monitor technology are a means to which China aims to become a global leader in AI governance. Similarly, commitments to “strengthen cross-domain, interdisciplinary, and cross-border cooperation and exchange, and solidify an artificial intelligence governance consensus” renew calls for coordinated development from a diverse set of sectors.[19]
Angling to be a global leader in AI, there are a litany of state commitments regarding flashy topics, such as strengthening knowledge of corporate social responsibility, ensuring the integration of ethical principles when using AI or related technologies, and implementing ethical reviews of said technological innovations. Since Xi Jinping Thought extols increasing China’s global presence in trade and its related procedures, the document pledges the country will “actively participate in the formulation of international, national, industry, and organizational standards related to artificial intelligence.”[20] China wishes to have a seat at the table when it comes to creating global technology standards.
The final section of the Joint Pledge, Chapter IV: Supplementary Provisions, reaffirms the partnership between the State and capital, but also secures primacy of the PRC and submission of private interests. These articles require the non-state signatory units of the Joint Pledge to “abide by laws and regulations and relevant state provisions,” “practice the contents of the Joint Pledge and accept society’s supervision,” “formulate self-discipline norms,” and recognize that the state body of the Artificial Intelligence Industry Alliance ultimately reigns supreme when it comes to interpreting the provisions of the document.[21] The Joint Pledge, although still lacking considerable specifics on topics such as implementation, is rather consistent in terms of the tenants of the political economy posited in earlier plans for AI development.
A further follow-up to the 2017 State Plan is the Ministry of Science and Technology Notice on the Publication of the Guidelines for National New Generation Artificial Intelligence Innovation and Development Pilot Zone Construction Work, released by the People’s Republic of China’s Ministry of Science and Technology in August 2019, which was addressed to the science and technology departments of the provinces, autonomous regions, centrally administered municipalities, and lower-level urban planning units. The document can be best understood within the greater context of Chinese decentralized development directives, and is consistent with the mechanisms through which China’s autocratic power promotes, rather than hinders, economic growth. It further lays out steps on the implementation for the next steps of China’s AI campaign to remedy the short falls of the State Plan. By describing, in considerable clarity, how Chinese cities, which already have substantial AI infrastructure in place, can apply to establish national new-generation AI innovation and development Pilot Zones, the Ministry of Science and Technology (MOST) seeks to fulfill a laundry list of broad national goals placed on its shoulders. The Ministry commits to “fully implement[ing] the spirit of General Secretary Xi Jinping’s important instructions on artificial intelligence, accelerating the implementation of the deployment requirements of the State Council Notice on the Issuance of the New Generation Artificial Intelligence Development Plan, constructing national new generation artificial intelligence innovation and development pilot zones in an orderly manner, acknowledging the role of local stakeholders, test institutional mechanisms, policies, and regulations, forge a new path to promote the in-depth integration of AI and economic and social development, explore new approaches to governance in the intelligent era, and promote the healthy development of new-generation AI.”[22] The Notice is another instance of China’s economic strategy at work; private sector development in contemporary China is not a top-down process solely directed by Beijing. Instead, private actors and local governments promote their own interests by appropriating the executive capacity of formal institutions. How exactly MOST will implement such goals is a matter of local, rather than national, decision-making.
The construction of Pilot Zones for the development of AI is not a centralized and top-down led process; far from it. Instead, the MOST recognizes, in certain terms, the supremacy of local actors in the realm of effective construction and celebrates the uniqueness of local conditions. The final section of the Notice, listed under Construction Principles, states “local economic and social conditions [are to be combined] with the basic conditions for the development of AI to form unique experiences, practices, and development models…”[23] Yet, it is clear that cities in the industrialized Southeast, such as the Guangdong-Hong Kong-Macau Greater Bay Area, are prioritized over areas located in the Western half of the country, simply because these Southeastern cities already have developed strong urban economies, urban governance, and high levels of infrastructure that ease the development of AI. The disparities in development from region to region can be traced back to Deng Xiaoping’s fiscal reforms of the 1980s, which mandated that local governments receive less tax revenue from their domain’s agricultural production, while gaining further authority over surplus revenues derived from development projects in order to pursue further opportunities for economic growth. However, “the particular configuration of resource endowments, political constraints, skills of local leadership, and severity of budget constraints determined the variations in responses to institutional incentives in different localities in China,” inadvertently created substantial disparity in terms of the level of development between provinces.[24] According to Zero2IPO, an independent Chinese market research firm, as of the first quarter of 2020, “local and provincial funds far outnumbered national-level guidance funds, but the national-level funds were typically several times larger in terms of target size as well as capital raised,” and although “local and provincial funds operate throughout the country, [they] are concentrated in the more developed eastern and southern provinces and in existing technology hubs such as Beijing, Shanghai, and Shenzhen.”[25] This disparity currently manifests itself in various metrics. For example, the number of first AI contracts awarded by prefectures highlights the steep East-West divide in terms of firms’ access to government resources.[26] China’s support for and encouragement of local economic decision making in the late 20th century caused certain regions to be deemed more suitable for state investment for China’s AI program.
The Guidelines for National New Generation Artificial Intelligence Innovation and Development Pilot Zone Construction Work also urges local governments, rather than the central state, to serve as the primary vehicles of construction utilizing their preexisting development foundations, and even goes so far as to reaffirm support for local governments to “increase capital investment in Pilot Zone construction, design appropriate policies for Pilot Zone Construction, and actively guide enterprises and social forces participating in the construction of the Pilot Zone.”[27] The source’s lack of specifics regarding how exactly local governments should proceed in increasing investment and guiding enterprise is pertinent to the level of state tolerance of private interests eager to fill the administrative gaps. China’s reliance on informal institutions as a means of stimulating economic growth by harnessing competition between local governments vying for limited resources and appointments is also relevant. Of course, it remains difficult to determine exactly how and to what extent special deals affect China’s economic development.
All three Chinese state documents not only offer guidance on the development of AI, but they each call for the use of burgeoning technologies to benefit the country’s population on the whole. This consistent desire to fulfill the needs of the people traces back to the state’s ideological orientation. For instance, according to the principle of Marxist political economy, “the direct and final purpose of production under socialist public ownership, unlike under private ownership, is to meet the material and cultural needs of the whole people to the maximum extent possible.”[28] According to the document, the impact of national development on the people must be given the utmost consideration. They ensure that development progresses, and because of the people’s indispensable contributions, the benefits of progress should positively affect all. Hence, the stated chief concern of the PRC is to improve the people’s livelihoods. Ultimately, it is this concept of development ostensibly centered around the people, which is constant throughout China’s ever-evolving interpretation of socialist political economy.
Since the mid-twentieth century, the Chinese government has shown its willingness to adapt bureaucratic systems and parcel out oversight in the name of effective national development. AI development follows the model of Chinese planning worked through local decentralization that has been in place since Mao, namely one consistent with (at least according to the Chinese Communist Party) Marxist-Leninist tenants. Ultimately, central authorities have learned from decades of tumultuous development and are now, in the twenty-first century, one step ahead, harnessing the productivity, know-how, and effectiveness of local private and public actors from the get-go to best further a national initiative.
Endnotes
[1] Jean C. Oi, Rural China Takes Off: Institutional Foundations of Economic Reform (Berkeley: University of California Press, 1999), 4.
[2] Enfu Cheng, “Marxism and Its Sinicized Theory as the Guidance of the Chinese Model: The ‘Two Economic Miracles’ of the New China,” World Review of Political Economy, vol. 9, no. 3, (2018): 308.
[3] Cheng, “Marxism and Its Sinicized Theory,” 305.
[4] Kellee S. Tsai, Capitalism Without Democracy (Ithaca and London: Cornell University Press, 2007), 199.
[5] Oi, Rural China Takes Off, 13.
[6] Cheng, “Marxism and Its Sinicized Theory,” 308.
[7] Cheng, “Marxism and Its Sinicized Theory,” 305.
[8] Paul Mozur, “Beijing Wants A.I. to Be Made in China by 2030.” The New York Times, July 20, 2017, https://www.nytimes.com/2017/07/20/business/china-artificial-intelligence.html, accessed 06 November 2021.
[9] Tsai, Capitalism Without Democracy, 9.
[10] PRC State Council, “A Next Generation Artificial Intelligence Development Plan,” (20 July 2017) https://www.newamerica.org/cybersecurity-initiative/digichina/blog/full-translation-chinas-new-generation-artificial-intelligence-development-plan-2017/, accessed 22 October 2021.
[11] Cheng, “Marxism and Its Sinicized Theory,” 307.
[12] PRC State Council, “A Next Generation.”
[13]PRC State Council, “A Next Generation.”
[14] Jeffrey Ding, “Deciphering China’s AI Dream: The Context, Components, Capabilities, and Consequences of China’s Strategy to Lead the World in AI.” Centre for the Governance of AI, Future of Humanity Institute, University of Oxford, March 2018, https://www.fhi.ox.ac.uk/wp-content/uploads/Deciphering_Chinas_AI-Dream.pdf, 4.
[15] Cheng, “Marxism and Its Sinicized Theory,” 306.
[16] Daniel Castro, Michael McLaughlin, and Eline Chivot. “Who Is Winning the AI Race: China, the EU or the United States?” Center for Data Innovation, August 2019, https://www2.datainnovation.org/2019-china-eu-us-ai.pdf, 3.
[17]Ding, “Deciphering China’s AI Dream,” 5.
[18]Artificial Intelligence Industry Alliance, “Chinese AI Alliance Drafts Self-Discipline ‘Joint Pledge,’” (31 May 2019) organization.https://www.newamerica.org/cybersecurity-initiative/digichina/blog/translation-chinese-ai-alliance-drafts-self-discipline-joint-pledge/ , accessed 31 October 2021.
[19] Artificial Intelligence Industry Alliance, “Chinese AI Alliance.”
[20] Artificial Intelligence Industry Alliance, “Chinese AI Alliance.”
[21] Artificial Intelligence Industry Alliance, “Chinese AI Alliance.”
[22] PRC Ministry of Science and Technology, “Original CSET Translation of ‘Guidelines for National New Generation Artificial Intelligence Innovation and Development Pilot Zone Construction Work,’ [科技部关于印发《国家新一代人工智能创新发展试验区建设工作指引》的通知],” (29 August 2019) https://cset.georgetown.edu/research/guidelines-for-national-new-generation-artificial-intelligence-innovation-and-development-pilot-zone-construction-work/, accessed 15 November 2021.
[23] PRC Ministry of Science and Technology, “Original CSET Translation.”
[24] Oi, Rural China Takes Off, 15.
[25] Ngor Luong, Zachary Arnold, and Ben Murphy, “Understanding Chinese Government Guidance Funds.” Center for Security and Emerging Technology, March 2021, https://doi.org/10.51593/20200098 .
[26] Martin Beraja, David Y. Yang, and Noam Yuchtman, “Data-intensive Innovation and the State: Evidence from AI Firms in China,” National Bureau of Economic Research, 2019, 13.
[27] PRC Ministry of Science and Technology, “Original CSET Translation.”
[28] Cheng, “Marxism and Its Sinicized Theory,” 306.