China Report is MIT Technology Review’s newsletter about technology developments in China. Sign up to receive it in your inbox every Tuesday.
Back in April, there was a major development in the AI space in China. The Chinese internet regulator published a draft regulation on generative AI. Named Measures for the Management of Generative Artificial Intelligence Services, the document doesn’t call out any specific company, but the way it is worded makes it clear that it was inspired by the incessant launch of large-language-model chatbots in China and the US.
Last week, I went on the CBC News podcast “Nothing Is Foreign” to talk about the draft regulation—and what it means for the Chinese government to take such quick action on a still-very-new technology.
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.
Many of the clauses in the draft regulation are principles that AI critics are advocating for in the West: data used to train generative AI models shouldn’t infringe on intellectual property or privacy; algorithms shouldn’t discriminate against users on the basis of race, ethnicity, age, gender, and other attributes; AI companies should be transparent about how they obtained training data and how they hired humans to label the data.
At the same time, there are rules that other countries would likely balk at. The government is asking that people who use these generative AI tools register with their real identity—just as on any social platform in China. The content that AI software generates should also “reflect the core values of socialism.”
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.
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.
The fact that the Chinese government can react so quickly to a new tech phenomenon is a double-edged sword. The strength of this approach, which looks at every new tech trend separately, “is its precision, creating specific remedies for specific problems,” wrote Matt Sheehan, a fellow at the Carnegie Endowment for International Peace. “The weakness is its piecemeal nature, with regulators forced to draw up new regulations for new applications or problems.” If the government is busy playing whack-a-mole with new rules, it could miss the opportunity to think strategically about a long-term vision on AI. We can contrast this approach with that of the EU, which has been working on a “hugely ambitious” AI Act for years, as my colleague Melissa recently explained. (A recent revision of the AI Act draft included regulations on generative AI.)
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.
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.”
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.
Have you observed anything interesting about China’s generative AI regulation? All opinions are welcome. Send them to email@example.com.
Catch up with China
1. China sent its new ambassador, Xie Feng, to the US. He was a leading negotiator for Beijing in a prisoner-exchange deal in 2021 that involved a Huawei executive and two Canadian citizens. (Wall Street Journal $)
2. Nvidia’s chief warned US lawmakers to be “thoughtful” about restricting semiconductor trade with China. (Financial Times $)
3. C919, China’s first large homegrown passenger jet, completed its first commercial flight this weekend. (CNN)
4. The Hong Kong government mandated this year that all SIM cards be registered with real names. One man is challenging that rule in the court. (South China Morning Post $)
5. Chinese hackers have targeted Kenyan government institutions for years, potentially to gain information on debt owed to Beijing. (Reuters $)
6. Though the company claims that it has strict data protection practices, TikTok employees regularly posted user information on a messaging and collaboration tool called Lark, also developed by ByteDance. (New York Times $)
7. The Vietnamese government is planning to launch a massive probe into TikTok. Unlike the US, Vietnam thinks the app needs more censorship. (Rest of World)
Lost in translation
The biggest news in China’s auto industry this week is that BYD, a world-leading hybrid and EV company whose EV production surpassed Tesla’s this year, was publicly accused by a Chinese competitor of violating car emission regulations. On May 25, Great Wall Motor, a domestic auto brand, posted on social media that it had reported two BYD plug-in hybrid models to the government for using gas tanks that fail to comply with the rules. Just two hours later, BYD publicly responded and denied the accusation, but it didn’t release more details on the hybrid models in question.
According to the Chinese publication China Entrepreneur, the accusation is a good example of business competition between the two companies. Great Wall Motor used to lead domestic gas car sales but is struggling to adapt to the global energy transition. BYD’s hybrid and EV offerings, on the other hand, have allowed it to dominate the domestic market and take off internationally. It’s not clear yet how this saga will end, as people are waiting on the government to comment on the validity of the accusation. If it’s true, it could deal a big blow to BYD’s brand image and commercial prospects.