China is betting big on AI - and here’s why it’s going to pay off
China’s economy may expand 26 per cent by 2030, as artificial intelligence accelerates worldwide increases in productivity, PwC said.
China will see the greatest economic gains from artificial intelligence (AI) by 2030 as the technology accelerates global GDP growth by increasing productivity and boosting consumption, says PwC in a new research report released Tuesday.
Dubbed the fourth industrial revolution, AI technologies are expected to boost global GDP by a further 14 per cent by 2030 – the equivalent of an additional US$15.7 trillion – and China, as the world’s second largest economy, will see an estimated 26 per cent boost to GDP by that time, the PwC report said.
Launched at the World Economic Forum’s annual June meeting in northeast China’s Dalian city, often known as the Summer Davos, the report said labour productivity improvements would account for over half of the US$15.7 trillion in economic gains from AI between 2016 and 2030 – more than the current output of China and India combined – while increased consumer demand resulting from AI-enabled product enhancements will account for the rest.
“The analysis demonstrates how big a game changer AI is likely to be – transforming our lives as individuals, enterprises and as a society,” said Anand Rao, global leader of artificial intelligence at PwC.
The technology behind an array of advanced applications, from facial recognition to self-driving vehicles, is the centre of attention for almost every tech company in China as they bet big on AI to gain a competitive edge before it begins to have a more profound impact on people’s lives.
Since the start of this year, Chinese internet heavyweights Baidu, Tencent Holdings and Alibaba Group have been competing harder than ever to lure top AI talent from Silicon Valley in order to accelerate their own AI development. Alibaba owns the South China Morning Post.
PwC predicts that North America will experience productivity gains earlier than China due to its first mover advantage in AI but China is expected to pull ahead of the United States in terms of AI productivity gains within 10 years after it catches up to the technology.
According to the PwC research, AI is projected to boost China’s GDP by 26 per cent by 2030, while for North America the number is 14.5 per cent. For developing countries in Latin America and Africa, the expected GDP gain will only be about 6 per cent due to the much lower rates of AI technology adoption.
“China has already made great leaps in the development of AI and our research shows that [AI] has the potential to be a powerful remedy for slowing growth,” said Chuan Neo Chong, chairwoman of Greater China operations for global consultancy Accenture.
In separate research done by Accenture, AI is expected to accelerate China’s annual growth rate from 6.3 per cent to 7.9 per cent by 2035. The Accenture research, published on Monday, shows that AI could boost China’s gross value added (GVA) by US$7.11 trillion by 2035 and has the potential to boost China’s labour productivity by 27 per cent by the same year.
Minimising the economic imbalances brought about by AI will be an important challenge, said Lee Kai-fu, the former Greater China president of Google and founder of venture capital firm Sinovation Ventures.
Those developing countries which will experience rapid population growth in coming decades are expected to be hardest hit by AI in terms job losses, he added.
“Most of the wealth created by AI will go into the US and China because of their big pool of talent and [high levels of data generation], as well as the size of their markets,” said Li, who is one of the most prominent advocates of AI in China.