China’s investment in AI business, infrastructure, and research could pay off big over the next decade.
What’s new: AI is expected to add $600 billion to the Chinese economy by 2030, according to an analysis by consulting firm McKinsey.
Market-ready technologies: The researchers interviewed more than 50 experts and analyzed market data collected between October 2021 and November 2021. They looked for market-ready AI technologies (as opposed to those that are either early-stage or mature) with the highest potential for impact in the coming decade. Conclusion: Transportation, manufacturing, enterprise software development, and healthcare stand to add huge value to the nation’s economy.
- Transportation, which encompasses the automotive and logistics applications, is expected to constitute 64 percent of the total contribution. Autonomous vehicles alone would contribute $335 billion including sales and savings. For instance, autonomous vehicles are expected to cause fewer accidents, which will lead to savings on ambulance rides and hospital stays. AI is also expected to help fleet managers stay on top of maintenance and plan more efficient paths through China’s network of roads, rails, waterways, and air routes.
- Manufacturing is expected to make up 19 percent of the total. The majority ($100 billion) would come from innovations in efficiency and productivity like assembly-line robots or wearables that monitor workers. The rest ($15 billion) would reflect AI-enabled improvements in design processes.
- The report forecasts that around 13 percent would come from enterprise software. Just over half of that ($45 billion) would be generated by cloud and AI tools. The remainder ($35 billion) would arise from software as a service.
- AI’s potential to aid with drug discovery, clinical trials, patient care, and other medical applications is expected to comprise the final four percent, amounting to around $25 billion.
The big picture: In 2017, China announced its aim to become “the world's primary AI innovation center” by 2030. Since then, the country has pushed to accelerate AI research, development, and product development. The latest AI Index estimated that China accounted for one-fifth of all private investment in AI.
Yes, but: Not everything is rosy in China’s tech sector. Venture capital investment in the first four months of 2022 was 43.5 percent lower than the same period in 2021 — a decline nearly four times more severe than the global average.
Why it matters: China’s contribution to AI has been impressive, but the outcomes outlined in the report are not foregone. To cash in on AI’s potential, China must put more effort into acquiring and using high-quality data, collaborating with other nations, protecting intellectual property, and training skilled workers, the report says.
We’re thinking: Many commentators view AI development as a competition among global superpowers. Rising tensions between the U.S. and China tend to reinforce this view. Yet every nation’s AI effort relies on numerous individual developers. This global community can play an important role in steering AI in directions that benefit all people as well as their home countries.