China's AI heat is powered by emerging technologies and commerce, as well as government support. At the First Session of the 13th National People's Congress of the People's Republic of China held on March 5, 2018, Premier Li Keqiang mentioned in the Report on the Work of the Government that, "We will develop powerful new growth drivers. We will create big, strong industrial clusters in emerging industries, implement the big data development action plan, step up next-generation artificial intelligence R&D and application, and do more to promote the Internet Plus model in many fields like medical care, eldercare, education, culture, and sports. We will develop intelligent industries and expand intelligent living. We will use new technologies, new forms of business, and new models to transform and upgrade the traditional industries. Statistics on emerging industries will be strengthened." This is not the first time that AI is included in the Report on the Work of the Government. In March 2017, Mr. Li Keqiang mentioned in the "Government Working Report": "On the one hand, we must accelerate the development of new industries such as new materials, artificial intelligence, integrated circuits, biopharmaceuticals, and fifth-generation mobile communications. On the other hand, we must apply big data, cloud computing, Internet of Things and other technologies to accelerate the transformation and upgrading of traditional industries, and take the development of intelligent manufacturing as the main target."

Before mentioning AI in the Report on the Work of the Government, the Chinese government has issued a number of relevant policies to stimulate AI technologies and industry. In May 2016, the National Development and Reform Commission, the Ministry of Science and Technology, the Ministry of Industry and Information Technology and the Office of the Central Cyberspace Affairs Commission jointly issued the Three-Year Action Plan for "Internet Plus" Artificial Intelligence Program, which states a goal to "form an artificial intelligence market valuing 100 billion yuan by 2018". According to the National Plan for Scientific and Technological Innovation During the Period of the Thirteenth Five-year Plan issued by the State Council in July 2016, China should develop human-like intelligent technologies and make breakthroughs in the theoretical methods and key technologies of human-machine fusion, and develop related equipment, tools and platforms to enable human-like vision, audition, language, and mind to support the development of the intelligence industry. In July 2017, the State Council released the Development Plan on the New Generation of Artificial Intelligence and proposed a "three-step" strategic goal that China should pool all resources available to take the lead in artificial intelligence by 2030, with core AI industry valuing over 1 trillion yuan, and supporting industries valuing over 10 trillion yuan. In December 2017, the Three-Year Action Plan for Bolstering the Development of the Next-Generation Artificial Intelligence Industry (2018-2020) was released by the Ministry of Industry and Information Technology. The plan states that China should focus on the in-depth integration of information technology and manufacturing technology, and the industrialization and integration of next-generation artificial intelligence technologies, promote the extensive integration of AI and manufacturing, and accelerate the pace in building itself into a major power of manufacturing and network.

Frequent release of AI policies in China means that AI has already become a strategic priority of China in the context of global competition. The Chinese government is generally open and liberal in terms of policies issued. It encourages innovation even though without a sound system of laws. To sum up, China has a favorable environment and right policies for AI.

China's AI Industry and Existing Problems

Starting from 2017, the policy focus has been shifted from AI technology to technology-industry fusion. It is clearly stated in the "Development Plan on the New Generation of Artificial Intelligence" issued by the State Council that, "The economic development of China's economy has entered into a stage of New Normal and it is a challenging task to deepen the supply-side structural reform. It is, therefore, necessary to accelerate the in-depth application of artificial intelligence, cultivate and strengthen the artificial intelligence industry to inject new fuel for the economic development of China." In the long run, the AI industry will remain its explosive growth with lots of players and products, and its presence will penetrate into vertical industries. Accumulated technological potential has been released quickly, and strong momentum is seen in new technologies. Breakthroughs in algorithms and computing power have laid a strong groundwork for further technological innovation.

After a long period of accumulation of AI technologies, the number of AI patents has been surging after 2010. Statistics show that the technology maturity trend is an "S" curve in the long run, and the growth of patents came to a halt around 2002 and 2008. Overall, technologies are developing with many fluctuations.

China's number of AI enterprises has been growing at a steady pace since 2004. Emerging AI players such as iFLYTEK, Horizon, and SenseTime have nurtured a pipeline of top AI talents. With cutting-edge depth algorithms, they have been penetrating into vertical sectors such as automatic driving, intelligent security, robotics, and finance to explore relevant application scenarios and business models. Thanks to China's policy guidance and capital investment, the number of emerging AI enterprises has seen a rapid increase, with 128 and 28 added in 2016 and 2017 respectively, mainly focusing on face recognition, machine vision and speech recognition.

AI enterprises concentrate in Beijing, Shanghai, and Shenzhen that boast solid Internet industry foundation, lots of high-end talents gathering and a favorable environment to invest in innovation. At the same time, Hangzhou, Nanjing, and Chengdu are attaching great importance to cultivating emerging AI industries, and AI industrial clusters have appeared in these cities. Domestic investment in artificial intelligence mainly targets seed round, angel round, A round and B round investment and financing. The market has lasting enthusiasm for AI, with total investment and financing over 180 billion yuan in 2017, an average of nearly 600 million yuan for each amount.

At the beginning of 2018, Premier Li Keqiang re-emphasized that China should strengthen the research and development of next-generation AI technologies, and use new technologies, new forms of business, and new models to transform and upgrade traditional industries. A golden age may have arrived for the industrialization of China's AI technologies. But at the same time, we must realize existing problems in algorithms, data, computing power, application scenarios, and talents as China promotes the development of the AI technologies and industry.

Development Trend of Shanghai's AI Industry and Suggestions

As an international mega-city, Shanghai boasts abundance in big data and wide and in-depth smart applications. Talents of all kinds and research institutes of all types gather here. All these lay a solid groundwork to develop AI. Shanghai prioritizes and promotes the development of AI technology and industry. AI has been made a strategic priority as Shanghai aims to build itself into the world's best city, stimulate innovation-driven development, and drive its economic transformation and upgrading. Developing AI has been recognized as a core engine to accelerate Shanghai's pace in building an influential, global center of technological innovation. The key for Shanghai to develop AI industry in Shanghai is to consolidate and upgrade the efficiency of the physical economy. AI represents both a new growth driver and basic productivity. In terms of the quality and efficiency of economic development, AI is an integral part of our new industrial system. Shanghai must step up its efforts in this field and give consideration to its own adjustment of industrial structure.

Last October, the Shanghai Municipal People's Government issued the Implementation Opinions on Promoting the Development of Next-Generation Artificial Intelligence. It states that Shanghai will launch in full swing the "Intelligent Shanghai (AI@SH)" campaign to empower the development of the real economy and the construction of new smart cities through AI. The aim is to build an application-driven, technology-led next-generation "6+6+3+6" AI development system featuring industrial synergy, ecological cultivation, and talent gathering. At the same time, Shanghai will create a better environment for AI innovation and entrepreneurship. More investment will be channeled into basic research and technological innovation, to produce more scientific and technological achievements. In addition, Shanghai will intensify its efforts to translate scientific and technological achievements into actual productivity and enable scale benefits as it builds China's frontline of AI development. It is estimated that by 2020 Shanghai's key AI industries will value over 100 billion yuan.

Seizing firmly the new opportunities in AI development, Shanghai should focus on "industry agglomeration, application demonstration, platform construction, and ecological integration" as indicated below:

First, encouraging the construction of AI industry clusters. Shanghai should establish an overall plan for AI industry clusters and pool all resources to drive the construction of AI industry clusters and innovation and application demonstration in key districts and counties including Xuhui and Lingang. Supporting service platforms should be built and improved to support AI innovation and practice, and build Shanghai's next-generation AI ecosystem. Support should be intensified for YITU, SenseTime, Cambricon and other innovative enterprises with strong technical capabilities, rapid growth, and promising prospects. Shanghai should be built into a global base of AI headquarters. That means city-wide innovation based on AI, dynamic resource allocation based on organizational innovation, and innovative development driven by data throughout the industry chain. At the same time, Shanghai should pick up its pace in industry cultivation and agglomeration, and gradually shape an AI industry cluster with global influence.

Second, deepening the demonstration projects of AI application. Building on its advantages in integrated circuits, smart cars, machine vision, etc., as well as its positioning as a global metropolis, Shanghai should take the lead in pilot projects and work closely with national ministries to gain policy and pilot support. A number of major application demonstration projects in key areas such as finance, security, education, medicine, automotive industry, cloud computing, services, smart city, intelligent industrial production, and intelligent enterprise decision-making should be launched. These demonstration projects will drive data integration and opening up, improve urban management capability and contribute to AI industry clustering. Shanghai should also attract international and domestic leading AI research and development institutions, functional institutions to settle down, and build corresponding technology research and development labs. At the same time, more efforts should be placed on translating scientific and technological payoffs in AI.

Third, building an AI collaborative innovation service platform. Home to lots of innovators such as colleges, institutes, and enterprises, as well as superior resources, Shanghai should facilitate cooperation between colleges and leading enterprises to build AI schools and AI labs, in order to boost collaborative innovation in key AI technologies. At the same time, an industry-academia-research collaborative innovation service platform should be established to nurture high-end professionals and train talents of all types. Shanghai should establish a series of public service platforms for research and development, training resource libraries of considerable size, AI computing service platforms, AI product evaluation platforms, and test verification platforms to promote the commercialization of AI technologies. Shanghai should also foster innovative AI products such as intelligent identification and understanding, intelligent control and collaboration. Active efforts should be invested in translating scientific and technological achievements and incubating venture teams, with the support of AI industry funds. A number of enterprises dedicated to AI should be nurtured in areas including Xuhui Binjiang. Shanghai should also build a national-level AI innovation and incubation base gathering high-end talents.

Fourth, creating a favorable environment for AI development. With the support of industrial alliances such as Shanghai Artificial Intelligence Development Alliance, Shanghai should stimulate synergy among both upstream and downstream players along the AI industry chain such as the chip, algorithm, software, and solution. Both AI enterprises and traditional enterprises should be guided to have rational positioning and work closely for win-win results. That is how Shanghai will picture a new blueprint of AI development. At the same time, Shanghai should hold world-class AI conferences and competitions to keep up with and attract advanced AI technologies and talents. Shanghai should take the lead in China to build an AI industry ecosystem that integrates "training, incubation, demonstration, application, communication, and transformation". That will make Shanghai into an AI technology service and ecosystem hub in the Yangtze River Delta, in China and even in the world.