China Aims To Build Artificial Intelligence Industry By 2030: Goldman Sachs

By Mani
Updated on

The central Chinese government’s efforts to build an “ intelligent economy ” and “intelligent society” by 2030 in China with an aim to build Rmb10 trillion relevant industries will propel the country’s GDP growth over the coming two decades, notes Goldman Sachs. In their Aug. 31 research piece titled “China’s Rise in Artificial Intelligence,” Piyush Mubayi and colleagues dove deep into China’s ambitious plans, the factors that make China unique, and the companies that are aiding faster growth.

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China’s major strides in artificial intelligence

Terming AI as the apex technology of the information era, the Goldman Sachs analysts highlight how it has evolved since 1950:

Mubayi and team traced China’s emergence as a global contender in using AI to propel its economic progress. They point out that AI found its place first in the China Premier’s work report during the 12th National People’s Congress in March. Then in July, the State Council published a national development plan on AI. The analysts argue that with this plan, the country expects AI to drive technology-enabled business innovations and industry transformations, ultimately resulting in an early lead in building an “ intelligent economy ” and “intelligent society” by 2030.

China's march towards AI intelligent economy intelligent economy

The Goldman Sachs analysts expect AI technology to become a priority on the Chinese government’s agenda, with further impetus from supportive national / regional policy. Outlining China’s major strides in the AI segment, the analysts note that China has the second-biggest AI ecosystem, next only to the U.S.

Intelligent Economy - China’s Internet giants propel its AI market

Mubayi and colleagues believe that for China’s Internet giants (Baidu, Alibaba and Tencent), artificial intelligence will help crystallize the value in the data from their multiple, distinct businesses and associates. The analysts highlight that Baidu leads in AI research, with its leading technology for speech recognition and autonomous driving. The Goldman Sachs analysts point out that Alibaba could showcase its gigantic e-commerce platform with a GMV of US$547 billion in FY 17, which is considered as one of the largest use cases for AI. Though late to the AI party, Tencent’s ambitious Seattle AI lab launch this year underscores the maturing neural networks and shift towards fundamental research in China.

The Goldman Sachs analysts explain how China could attract the world’s best minds in the AI industry. They point out that Baidu offers competitive salaries when hiring machine learning talent. The analysts believe that talent of the highest caliber will drive the innovative nature of the industry in China.

Enthused by the substantial future growth and by using SOTP-based methodology, the Goldman Sachs analysts peg their 12-month target prices of Baidu, Alibaba and Tencent at US$240, US$208 and HK$369, respectively.

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