Artificial Intelligence Development: Implications for China

Montenegrin Journal of Economics. 2023. Vol. 19. No. 1. P. 139–152.

Решетникова М. С., Михайлов И. А.

The Chinese government has developed ambitious policies for global leadership in the field of AI and economic growth. While China has made progress in several areas, it is lagging in developing its microelectronics sector. The purpose of the article is to advance the understanding of the relationship between technologies to manufacture integrated circuits (ICs) and the production capabilities of the Chinese AI industry. To this end, using the latest data on high-tech chip manufacturing in China from 2010 to 2019, this study examined the influence of import restrictions on the manufacture of high-tech equipment and the current state of IC production, and analyzed the opportunity to overcome dependence on foreign equipment and technologies. The results of the research show that (a) China has enough resources for production, especially in comparison with the leading chipmaking countries; (b) since 2016, there has, indeed, been a decline in the actual value of the chip market in China, which confirms the difficulties in connection with the imposed restrictive measures; and (c) there is a gap in the production chain in China precisely at the stage of creating the latestgeneration chips. To fully harness and scale the power of AI to achieve sustainable economic growth, Chinese policymakers should align import substitution strategies with appropriate business models and incentive structures.

Keywords: USA, China, sustainability, import substitution, integrated circuit, artificial intelligence