China's Great Leap Forward in AI

Analysis

By Major General Sudhakar Jee VSM (Retd.)

DeepSeek, founded in July 2023 by Liang Wenfeng of China, the co-founder of High-Flyer, launched an eponymous chatbot alongside its DeepSeek-R1 model in January 2025, which was not a surprise for those who understood China well.  Artificial intelligence (AI) is rapidly reshaping industries worldwide, with China emerging as a key player in demonstrating how AI can drive industrial transformation on a much larger scale. The potential market value of AI in the global economy is expected to cross $15.7 trillion by 2030. With a growing AI industry valued at over $ 70 billion and a dynamic ecosystem of over 4,300 companies, China provides insights into how nations can align strategy, innovation, and ecosystem development to harness AI's transformative potential.

Artificial intelligence industry in China

The origins of artificial intelligence (AI) development in China can be traced back to the late 1970s, coinciding with Deng Xiaoping's economic reforms that prioritized science and technology as the principal driving force of the nation's productivity. Initially, China lagged behind many Western nations in the field of AI. However, in 2016, the Chinese Communist Party (CCP) introduced its 13th Five-Year Plan, which articulates the country's ambition to establish itself as a global leader in AI by the year 2030.

Designated Specialised AI Sectors in China

The State Council has a list of "national AI teams" that includes fifteen China-based companies, such as Baidu, Tencent, Alibaba, SenseTime, and iFlytek. Each company is spearheading the development of a designated specialized AI sector in China, including facial recognition, software/hardware, and speech recognition.

China's rapid AI development has significantly impacted Chinese society across various areas, including the socio-economic, military, and political spheres. Agriculture, transportation, accommodation and food services, and manufacturing are the top industries most affected by further AI deployment.

Some of the motivations stated by the State Council for pursuing its AI strategy include the potential of artificial intelligence for industrial transformation, improved social governance, and maintaining social stability. The private sector, university laboratories, and the military are collaborating in many facets, as there are few existing boundaries.

Strategic foundations for AI growth

China’s trajectory in AI is underpinned by a structured and phased approach. The Next Generation AI Development Plan,  launched in 2017, sets ambitious goals, aiming to position AI as a core driver of economic transformation by 2025 and establish the country as a global hub for AI innovation by 2030.

The role of ecosystem enablers

China’s progress in AI is facilitated by a robust ecosystem that integrates infrastructure, data, talent, and innovation. Investments in advanced technologies, such as its expansive 5G networks and energy-efficient green data centres, provide a solid foundation for AI applications.  These infrastructural advances support the deployment of high-capacity computing power, which is essential for training large-scale AI models. With one of the fastest-growing data ecosystems globally, China has developed strategies to improve data interoperability and accessibility across sectors. In parallel, China’s education and research institutions have significantly scaled AI-related programmes, reflecting the country’s recognition of the need for a skilled workforce.

Significant Shift in focus in Education in China

 China produced 9038 PhDs in Science, Technology, Engineering & Mathematics (STEM) while the USA was the global pole leader in this field having 18, 289 PhDs in STEM in 2000. China launched the "Young Thousand Talents Program" in 2007. The results of this decision were quick to be seen, and in 2010 wherein China surpassed the USA in the number of PhDs in STEM, with China producing 34,801 STEM Doctorates that year while the USA produced 26,076. In 2019, China produced 49,498 PhDs in STEM, the USA - 33,759, and India had only 700 plus STEM PhDs. Of these 700-plus Indian STEM PhDs, 70% have renounced their Indian citizenship and have migrated to foreign countries.

Buoyed by the unprecedented success of the “Young Thousand Talents Program”, China launched the “National High-end Foreign Experts Recruitment Plan” on March 17, 2020, to further hone up their technological prowess and by this year's end, China was projected to produce 77,179 PhDs in STEM in comparison to USA’s 39,959.

World-leading Scientists

As the Doctorates in STEM in China kept on increasing, so did their number of world-leading scientists. Sample the period 2020-2024 for the number of world-leading scientists in both China and the USA. In 2020, the USA had 36,959 while China had almost half of that number at 18,805. In 2024, China became the global leader in world-leading scientists with 32,511, and the USA had 31,781.

AI’s industry-specific impact

China’s approach to AI emphasizes practical applications tailored to the unique needs of various industries. By integrating AI technologies such as digital twins, predictive maintenance and generative AI, industries such as manufacturing, healthcare, transportation, retail, and energy are witnessing transformative advancements. The emphasis on tailoring AI solutions to specific needs highlights an approach that other regions could adopt to maximise impact and overcome barriers to adoption.

Research and development

China is massively investing in all aspects of AI development, facial recognition, biotechnology, quantum computing, medical intelligence, and autonomous vehicles.

Military impact

China seeks to build a "world-class" military by "intelligentization" with a particular focus on the use of unmanned weapons and artificial intelligence. It is researching various types of air, land, sea, and undersea autonomous vehicles.

China's management of its AI ecosystem contrasts with that of the United States. In general, few boundaries exist between Chinese commercial companies, university research laboratories, the military, and the central government. It is further strengthened by a Military-Civil Fusion Development Commission, which is intended to speed the transfer of AI technology from commercial companies and research institutions to the military in January 2017.

Challenges and opportunities

Despite its successes, China’s AI development is not without obstacles. Issues such as fragmented data flows, uneven regional capabilities and a significant talent gap present ongoing challenge.

Addressing these will require collaborative efforts across sectors and borders. China’s experience also highlights the importance of maintaining interoperability and fostering partnerships to enable scalable AI adoption.

Where does India stand?

India is home to 16% of the world’s AI talent, showcasing its growing influence in AI innovation and Adoption. Being among the top 10 countries globally in AI readiness among 73 countries, India's AI Mission was launched on 07 Mar 2024. Its AI concentration(talent) has grown by 263% since 2016. As one of the leading countries in AI and Robotics globally, the country has demonstrated readiness for the Frontier Technologies Index, which ranked 36th in 2024, up from 48 in 2022.

The Chinese government's commitment to global AI leadership and technological competition was driven by its previous underperformance in innovation, which the CCP saw as a part of the Century of Humiliation.

As China missed both industrial revolutions -   the mid-18th century and the late-19th century- China desires to take advantage of the technological revolution in today's world, led by digital technology, including AI, to resume its "rightful" place by securing an international technological dominance.

Disclaimer: This paper is the author's individual scholastic contribution and does not necessarily reflect the organization's viewpoint.