China Regulator Aims to Require a License to Launch an AI Model – Can the Chinese AI Industry Survive Anyway?

The US and China are the world’s two largest economies which have positioned themselves as rivals in almost any field, including the new and emerging sector of Artificial Intelligence (AI).

However, this seems to be a race where the US is in the lead for one simple reason — China’s Communist Party-run government won’t let AI run wild without heavy regulation.

China’s AI Sector is Limited by the Country’s Desire to Maintain Control

As soon as various AI startups started to emerge with generative AI offerings aimed at the masses, the country started to introduce strict regulations, with major penalties for any entity that doesn’t comply.

Some companies, like the Chinese version of TikTok, Douyin, require that AI-generated content be clearly labeled. Furthermore, anyone who aims to post on the platform must register under their real identity.

The US is also trying to regulate AI, but its focus is on managing threats to privacy, employment, or digital property.

Its Asian counterpart, however, isn’t only worried for the harm it could cause to its citizens. It is likely fearing the damage AI could do to its carefully built wall of censorship. China is also utilizing AI for surveillance, facial recognition, and similar use cases.

Experts say that Beijing seeks to balance encouragement for AI firms to develop the technology against its desire to control content.

The country’s internet watchdog, the Cyberspace Administration of China, is working on a system that would force AI firms to obtain a license before they release any generative AI models.

The AI Boom Caught China by Surprise

Previously, China issued a draft in April, which said that groups that wish to issue a generative AI model have 10 working days to register their product with authorities after launching the model.

The new system that the Cyberspace Administration of China is creating would further enforce this draft.

The country realized that its developers would try to launch AI models similar to those in the rest of the world, which started happening in early 2023.

For example, in February of this year, Sogou founder, Wang Xiaochuan, stated that China needs its own OpenAI.

The entrepreneur started a new company called Baichuan Intelligence, and it only recently released its next-gen language model, Baichuan-13B. Today, Baichuan is considered one of China’s most promising LLM developers.

The company launched in April, and it quickly raised around $50 million from a group of angel investors.

Can China Find a Balance Between Innovation and Control?

Meanwhile, the authorities are struggling due to their major goals, which is to develop world-beating technologies and maintain their longstanding censorship regime simultaneously (while also protecting its populous from the potential harms of AI).

Matt Sheehan of the Carnegie Endowment for International Peace commented on the situation, stating that this is the first time that Beijing finds itself in a situation where it will have to make a trade-off.

This seems to be the leading opinion on the situation in China, as one person close to the CAC’s deliberation stated:

If Beijing intends to completely control and censor the information created by AI, they will require all companies to obtain prior approval from the authorities.” However, at the same time, “the regulation must avoid stifling domestic companies in the tech race.

If the authorities fail to find the perfect balance between their two goals, China’s AI sector might not survive its own regulations.

Businesses will have to be extremely cautious and conservative about what AI they are trying to build. If their creations violate the new rules, the consequences could be quite severe.

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