Artificial intelligence: Implications for China
- Updated on: 2017-04-28
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The country is becoming a hub for global AI development. Five priorities can help China harness AI for productivity growth and prepare for the societal shifts it may unleash.
Artificial intelligence, or the idea that computer systems can perform functions typically associated with the human mind, has gone from futuristic speculation to present-day reality. A new discussion paper from the McKinsey Global Institute, originally presented at the 2017 China Development Forum, explores AI’s potential to fuel China’s productivity growth—and to disrupt the nation’s workforce.
Where computer systems once had to be programmed to execute rigidly defined tasks, they can now be given a generalized strategy for learning, enabling them to adapt to new data inputs without being explicitly reprogrammed. Advances in data collection and aggregation, algorithms, and processing power have paved the way for computer scientists to achieve significant breakthroughs in artificial intelligence. AI has now moved beyond the lab, with many machine-learning systems already in commercial use for a wide variety of applications. Adoption is growing rapidly in sectors such as finance, healthcare, and manufacturing.
As its capacity for innovation deepens, China has become one of the leading global hubs for AI development. Recognizing that the nation’s vast population and diverse industry mix can generate huge volumes of data and provide an enormous market, China’s biggest tech companies are making significant R&D investments in AI.
These technologies can dramatically boost productivity—and that could be a crucial capability for China to sustain its future economic growth as the country’s working-age population declines. Automating workplaces with AI could add 0.8 to 1.4 percentage points to GDP growth annually, depending on the speed of adoption. Realizing AI’s economic potential in China also depends on its actual adoption—not just among the technology giants but across China’s traditional industries. Achieving this goal will require building strategic awareness among business leaders, developing technical know-how, and overcoming implementation costs.
But wide adoption of these technologies would represent a profound shift for hundreds of millions of Chinese workers and for Chinese society as a whole. MGI estimates that half of all work activities in China could be automated, making it the nation with the world’s largest automation potential. Jobs made up of routine work activities and predictable, programmable tasks will be particularly vulnerable. While the impact on the labor market is likely to be gradual at the aggregate level, it can be sudden and dramatic at the level of specific work activities, rendering some jobs obsolete fairly quickly. Overall, AI will raise the premium placed on digital skills while reducing demand for medium- and low-skilled workers, potentially exacerbating income inequality.
Although the market will drive the development and adoption of AI, the right policy framework can establish a healthy environment for growth. Five priorities can form the basis of China’s AI strategy: building a robust data ecosystem, spurring adoption of AI within traditional industries, strengthening the pipeline of specialized AI talent, ensuring that education and training systems are up to the challenge, and establishing an ethical and legal consensus among Chinese citizens and in the global community.
AI technologies have exciting and far-reaching potential to improve healthcare, the environment, security, and education. At the same time, they raise serious and complex ethical, legal, and security questions. China has the capability and opportunity to lead international collaboration in the development and governance of AI, ensuring that the necessary frameworks are in place to ensure that these breakthrough technologies make a positive contribution to global growth and human welfare.
