- The Chinese government has stated it will curb disorderly competition in the artificial intelligence (AI) industry to avoid wasteful investment, even as AI stands as a crucial pillar of economic development.
- The National Development and Reform Commission (NDRC) said it would encourage provinces to develop AI in a coordinated manner, leveraging their unique strengths rather than chasing trends.
- Official Zhang Kailin emphasized that development must be based on local advantages, resources, and industrial foundations to avoid repeating the overcapacity situation seen in the electric vehicle industry, which has created deflationary pressure.
- President Xi Jinping has also previously warned about local governments over-investing in AI, fearing a herd effect.
- China views AI as a new growth engine in its technological competition with the US, attracting significant public and private investment.
- This week, Beijing announced a new action plan to accelerate the development, application, and governance of AI.
- The NDRC has pledged to create better AI planning at the national level while supporting the private sector in nurturing more “breakthrough unicorns,” such as the startup DeepSeek – a company that creates powerful and cost-effective AI models and has risen to prominence this year.
- A separate Bloomberg analysis shows that China is expected to install over 115,000 Nvidia AI chips in data centers in its western desert regions, demonstrating the massive scale of investment.
- While welcoming innovation, the government stresses the need for tight control to avoid repeating old lessons: overcapacity, poor efficiency, and economic imbalances.
📌 China is seeking to control the wave of AI investment by preventing disorderly and duplicative competition among provinces. The government wants localities to develop AI based on their unique advantages instead of rushing to follow trends. Startups like DeepSeek are making their mark, while data centers in the western deserts are expected to install over 115,000 Nvidia chips – showing great potential but also risks without master planning.
