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Friday, July 23, 2021, 12:37
Capturing the AI dividend
By James Lambert
Friday, July 23, 2021, 12:37 By James Lambert


In the race to become the leader in artificial intelligence, China and the United States are way ahead of the rest of the world. What does that mean for the other countries? Will these two global technology giants soak up the AI economic dividend all for themselves?

The answer is “no”. There is a huge opportunity for smaller, agile economies in Asia — to borrow from Isaac Newton — to stand on the shoulders of the two giants in order to reap the benefits of AI application in their own industries.

Of course, it is right to recognize the supremacy of the US and China. The AI research infrastructure they have built has translated into 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 skills bases, the dominant position of their cash-rich technology companies, and the data generation capacity of their vast populations.

However, the economic dividends from AI are not reserved for the researchers. The majority of the economic value promised by the AI revolution will be captured through innovation and application of AI technologies in industry. Enterprises and policymakers the world over should recognize that the AI dividend is theirs for the taking.

AI is a fundamentally open science. The relatively open borders to data flows and digital services mean the latest technological breakthroughs in one part of the world are quite quickly made available, and adaptable, to businesses everywhere else.

When it comes to AI application in industry, ambitious economies can learn from China’s achievements. China has managed to establish a culture of technology adoption and data sharing in consumer interactions and business practices that give it a distinct edge.

There are three factors behind this. The first is Chinese businesses’ openness toward technological trial and error. Chinese enterprises have demonstrated a fundamentally positive and flexible attitude to digital solutions over the past two decades, which served to accelerate AI integration and innovation. International executive surveys, such as the World Economic Forum Future of Jobs report, consistently rank China No 1 in the world — or close to it — for its people’s attitude toward AI adoption.

Second, technology uptake is helped by China’s robust 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 into various industries. The Chinese government has recently begun to tighten regulation on AI development and internet companies, but the repercussions of China’s broadly positive policy footing can be seen in the rate of investment taking place.

A publicly funded, US$2.1 billion AI-focused technology research park on the outskirts of Beijing is one example. More broadly, China accounts for almost 40 percent of new industrial robot installations globally, over three times more than second-placed Japan.

And third, China has established a world-class skills base to not only develop AI solutions but also to integrate them into industries. The rapid expansion of China’s pool of computer science and engineering graduates in recent years has been a core pillar of economic planning. China ranks third in the world for “AI skills penetration”, according to Stanford University’s AI Index report.

These three factors have created a virtuous cycle in China. Rapidly growing Chinese companies are bringing AI products to the market and competing to pursue AI solutions that are customized to fit into Chinese scenarios. These solutions are embraced by receptive businesses, willing to quickly test, adopt, and integrate AI products into their activities. In doing so, they generate vast amounts of data, which allow developers to constantly and nimbly improve their AI products.

Moreover, the growing domestic market justifies high levels of investment in the technology industry. The openness to AI across the wider economy is indirectly fueling Chinese innovation in high-tech computer chip manufacturing and software development.

Other Asian countries can benefit from China’s recent experience in AI, in pursuing their own virtuous cycle of AI integration. That means cultivating an open attitude toward AI adoption and integration within industry, emphasizing technology skills development and retention, as well as being open to foreign investment and technology trade. Chinese technology enterprises are major sources of funding for tech entrepreneurship in the wider Asian continent — which itself leads to valuable knowledge spillovers around the region.

The AI economic dividend is not a prize being fought over by two international heavyweights. It is a universal economic opportunity that all Asian countries can pursue, one that will shape the competitive landscape across the region over the next decade.

The author is director of Economic Consulting, Asia, at Oxford Economics. 

The views do not necessarily reflect those of China Daily.

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