Catch Up with China: The New Regulation of AI

Category Artificial Intelligence

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The Chinese government has proposed a new regulation to control the potential risks associated with AI. Despite the restrictive nature of the regulation, their intent appears to be to encourage companies to continue investing in AI, as apposed to scaring them away. The final regulations are expected to be finalized soon.

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As I said in the podcast, I see the draft regulation as a mixture of sensible restrictions on AI risks and a continuation of China’s strong government tradition of aggressive intervention in the tech industry. Neither of these requirements is surprising. The Chinese government has regulated tech companies with a strong hand in recent years, punishing platforms for lax moderation and incorporating new products into the established censorship regime.

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The document makes that regulatory tradition easy to see: there is frequent mention of other rules that have passed in China, on personal data, algorithms, deepfakes, cybersecurity, etc. In some ways, it feels as if these discrete documents are slowly forming a web of rules that help the government process new challenges in the tech era.

There’s one point I didn’t get to make in the podcast but that I think is fascinating. Despite the restrictive nature of the document, it’s also a tacit encouragement for companies to keep working on AI. The maximum proposed fine set for violating the rules is 100,000 RMB—about $15,000, a minuscule number for any company that has the capacity to build large language models.

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Of course, if a company is fined each time its AI model violates the rules, the amounts can pile up. But the size of the fine suggests that the rules are not made to scare the companies away from investing in AI. As Angela Zhang, a law professor at the University of Hong Kong, recently wrote, the government is playing multiple roles: "The Chinese government should not only be viewed as a regulator, but also as an advocate, sponsor, and investor in AI. Ministries championing AI development, along with state sponsors and investors, are poised to become a potent counterbalance against stringent AI regulation." .

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It may take a few months still before regulators finalize the draft, and months after that before it goes into effect. But I know that many people, including me, will be keeping a close eye on any changes. Who knows? By the time the regulation goes into effect, there could be another new viral AI product that compels the government to come up with yet more rules. You never know.

The Chinese government has made habit of heavily regulating the tech industry for the past few years, seeking to minimize potential risks. They've recently drafted a new law, which is raising some eyebrows due to its restrictive nature. Despite this, the government is sending positive sentiment towards companies continuing to invest in AI, with the proposed fines being only a small fraction of the money put into development. With the current developments, both the general public and the authorities are interested to see how the rules will turn out once they’re finalized.

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