China - Shanghai - AI Industry Promotion (2022)

Overview

The Shanghai Regulations on Promoting the Development of AI Industry, officially adopted on September 22, 2022, by the Standing Committee of the 15th Shanghai Municipal People's Congress at its 44th session, and subsequently coming into force on October 1, 2022, marks a significant legislative milestone as China's inaugural provincial-level regulation dedicated to the artificial intelligence sector. This pioneering legal instrument is meticulously designed to accelerate the high-quality development of the AI industry within Shanghai, aiming to solidify the city's position as a global leader and innovation hub in artificial intelligence. The overarching goal is to foster a dynamic AI ecosystem characterized by technological innovation, industrial growth, and widespread application across various facets of society, including economic activities, urban governance, and daily life.

The Regulations are structured around core principles emphasizing a people-centric approach, the ethical deployment of technology for societal good, innovation as a primary driver, and market mechanisms guiding development. It envisions an AI industry system that is open, ecologically integrated, features active innovation clusters, ubiquitous super-scenarios, and agile governance coupled with robust security. By doing so, Shanghai aims to cultivate an internationally influential 'Shanghai Highland' for AI. The document comprises 72 articles across six chapters, covering general provisions, fundamental elements and scientific innovation, industrial development, application empowerment, industrial governance and security, and supplementary provisions. This comprehensive scope reflects a holistic strategy to nurture a world-class AI industrial cluster, addressing both the opportunities and challenges presented by advanced AI technologies.

Definitions

For the purposes of these Regulations, 'Artificial Intelligence' (AI) is broadly defined as the theories, methods, technologies, and application systems that utilize computers or computer-controlled machines to simulate, extend, and expand human intelligence. This encompasses the capabilities to perceive environments, acquire knowledge, and employ that knowledge to achieve optimal outcomes. This definition underlines the foundational and functional aspects of AI, covering both the theoretical underpinnings and their practical manifestations in technological systems. It establishes a clear scope for the technologies and innovations that fall under the purview of these regulations, ensuring that all related activities are guided by a consistent understanding of AI.

The 'AI Industry' is further delineated to include the entire spectrum of activities involved in the research, development, and application of AI technology. This encompasses the development and production of both software and hardware products, the implementation of system applications, and the provision of integration services. Specifically, it includes the key basic components industry, intelligent software industry, and intelligent terminal industry. Moreover, the definition extends to related industries that are driven by the deep integration and application of AI technology across diverse fields such as economy, daily life, and urban governance. This comprehensive definition ensures that the Regulations cover the full value chain of AI, from foundational research and component manufacturing to diverse sectoral applications and services, thereby fostering an integrated and synergistic industrial ecosystem.

Governance and Institutional Framework

The Shanghai Municipal People's Government plays a central role in leading and overseeing the development of the AI industry. It is tasked with organizing the formulation of AI industry development plans, ensuring their integration into the broader national economic and social development strategies. Furthermore, the Municipal Government is responsible for guiding and coordinating the resolution of major issues encountered in AI scientific and technological innovation, industrial cultivation, application scenario construction, and the overall development of the industrial ecosystem. This top-down leadership ensures strategic alignment and coordinated efforts across various governmental levels and departments to achieve the city's AI ambitions.

To support this leadership, the Municipal People's Government is mandated to establish a municipal AI strategic advisory committee. This committee will comprise experts from higher education institutions, research organizations, enterprises, and other relevant entities, providing crucial consultation on major strategies and decisions pertaining to the city's AI industry development. Additionally, the Regulations delineate specific responsibilities for various municipal departments. The Municipal Economic and Information Technology Department is designated as the primary competent authority for the AI industry, responsible for planning, implementation, coordination, and promotion. The Municipal Development and Reform Department is tasked with overall coordination of major AI projects and infrastructure construction, while the Municipal Science and Technology Department supports frontier basic theories and key technology R&D. These clear divisions of labor, coupled with the advisory body, create a robust institutional framework for effective governance and strategic direction of Shanghai's AI sector.

Key Focus Areas

The Regulations place significant emphasis on strengthening AI infrastructure, particularly public computing resources. The city is committed to planning and promoting the construction of public computing infrastructure, encouraging its green and low-carbon development. This includes supporting entities in building and openly applying computing infrastructure based on independently developed AI-specific computing architectures. The Municipal Economic and Information Technology Department, in conjunction with other relevant departments, is tasked with formulating measures for public computing resource supply, promoting the construction and utilization of public computing resource platforms, and enhancing scientific scheduling of computing power. Through mechanisms like computing power incentives, the aim is to provide robust public computing support for AI technology and industrial development, ensuring equitable access for small and medium-sized enterprises.

Beyond infrastructure, the Regulations prioritize innovation and industrial clustering. Shanghai encourages R&D in core AI technologies, including high-performance smart chip design, AI frameworks, intelligent robots, and intelligent network-connected vehicles. It also supports the development of drone and unmanned ship industries, as well as AI applications in medical technologies. The city aims to foster an integrated software and hardware ecosystem, promoting the open sharing of AI operating systems, algorithm frameworks, common technologies, and data resources by leading enterprises to drive synergistic development across the industrial chain. Furthermore, the Regulations advocate for the creation of distinctive AI industrial parks to attract projects and facilitate industrial agglomeration, thereby building a comprehensive and competitive AI industry ecosystem.

Implementation Framework

The implementation framework for the Shanghai Regulations on Promoting the Development of AI Industry is multi-faceted, involving a combination of strategic planning, resource allocation, and targeted policy measures. At its core, the Municipal People's Government is responsible for organizing the formulation of comprehensive AI industry development plans, which are then integrated into the broader national economic and social development framework. This ensures that AI development is not an isolated initiative but a cohesive part of the city's overall growth strategy. The Regulations mandate that district people's governments also contribute by implementing AI development work within their administrative regions, focusing on promoting AI scenario applications and building local industrial ecosystems.

A critical aspect of the implementation involves fostering an environment conducive to innovation and industrial growth. The city is committed to providing a favorable development environment for AI enterprises, enhancing the integrated software and hardware ecosystem, and strengthening the agglomeration of AI enterprises to build a robust AI industrial chain. This includes supporting leading AI enterprises in opening up their AI operating systems, algorithm frameworks, common technologies, and data resources to drive collaborative development across the upstream and downstream sectors of the industrial chain. Furthermore, the Regulations encourage the establishment of AI-specific industrial parks to attract key projects and promote concentrated industrial development, ensuring that resources and support are channeled effectively to maximize impact.

Monitoring and Evaluation

Monitoring and evaluation under the Shanghai Regulations on Promoting the Development of AI Industry are designed to be dynamic and responsive to the rapidly evolving nature of AI technology. The Regulations stipulate that the Municipal People's Government and its relevant departments should proactively formulate, revise, or abolish regulatory rules and standards to align with new AI technologies, industries, business forms, and models. This adaptive approach acknowledges the fast iterative characteristics of AI and aims to prevent regulatory stagnation, ensuring that the governance framework remains relevant and effective.

A key aspect of this adaptive governance includes exploring differentiated regulatory approaches, such as graded management and sandbox supervision. These mechanisms are intended to stimulate the innovation vitality of various entities and expand the development space for the AI industry. For instance, high-risk AI products and services are subject to a list-based management system, requiring compliance reviews based on principles of necessity, legitimacy, and controllability. Conversely, medium and low-risk AI products and services are governed by a model of ex-ante disclosure and ex-post control, encouraging pioneering efforts. The Municipal Economic and Information Technology Department is also tasked with conducting surveys of AI industry data resources, consolidating key industry data, and exploring a filing system for algorithm models that have undergone testing and evaluation, thereby enabling continuous monitoring and informed policy adjustments.

Penalties, Liability, and Appeals

While the Shanghai Regulations on Promoting the Development of AI Industry primarily focus on fostering innovation and development, they also touch upon the aspects of industrial governance and safety, implicitly laying the groundwork for future considerations of penalties and liability. The Regulations emphasize the importance of balancing AI industry development with security, adhering to a holistic national security perspective to ensure the safety of the industrial chain and supply chain. Relevant departments are mandated to conduct safety inspections and supervision over AI applications in accordance with the law, indicating a commitment to oversight and accountability.

Furthermore, the Regulations highlight the exploration of a 'negative list' for AI scientific research and application fields by the Municipal Economic and Information Technology Department in conjunction with other relevant departments. This negative list would delineate areas where AI activities are explicitly prohibited, thereby setting clear boundaries for permissible innovation. Although the Regulations do not explicitly detail specific penalties or liability frameworks, the emphasis on strengthening intellectual property protection in the AI field, promoting the intellectual property of AI innovation achievements, and supporting rapid patent examination and dispute resolution mechanisms suggests an indirect approach to addressing potential infringements or harms. The mention of encouraging insurance institutions to develop products covering the full lifecycle of AI product R&D, production, sales, and application also points towards future mechanisms for risk mitigation and potential redress, signaling an evolving legal landscape for AI-related liabilities.

Relationship to Other Instruments

The Shanghai Regulations on Promoting the Development of AI Industry are designed to operate within the broader framework of existing national and local laws and administrative regulations, serving as a specialized instrument to guide AI development in the municipality. The Regulations explicitly state that their formulation is based on relevant national laws and administrative regulations, combined with Shanghai's specific circumstances. This ensures consistency and avoids conflicts with higher-level legal mandates. For instance, the Regulations are considered Shanghai's second local regulation in the digital economy field, following the 'Shanghai Data Regulations,' indicating a coordinated legislative effort to govern the digital economy comprehensively.

The document also outlines the responsibilities of various municipal departments, such as those for state-owned assets supervision, human resources and social security, education, health, finance, statistics, and national security, to formulate policies and measures within their respective scopes of functions and duties to support AI sector development. This demonstrates an integrative approach, where AI development is not siloed but is supported by a confluence of policies across different governmental domains. Furthermore, the Regulations promote the coordinated and integrated development of the AI industry within the Yangtze River Delta region, encouraging convergence of regional AI development plans, mutual recognition of technical standards, sharing of test data, and cost/benefit sharing for infrastructure. This regional alignment signifies an understanding that AI development transcends administrative boundaries and requires inter-jurisdictional cooperation, building upon existing regional development strategies.

International Alignment

The Shanghai Regulations on Promoting the Development of AI Industry implicitly and explicitly underscore a commitment to international alignment and cooperation, particularly in its ambition to build an internationally influential 'Shanghai Highland' for AI. The Regulations encourage enterprises, higher education institutions, scientific research institutions, and other organizations to strengthen international cooperation across various domains, including AI basic research, technology development, industrial development, standards formulation, and personnel training. This emphasis on international collaboration reflects a strategic intent to integrate Shanghai's AI ecosystem with global advancements and best practices.

While the Regulations do not directly reference specific international treaties or standards, the underlying principles of innovation-driven development, market leadership, and the pursuit of a world-class AI industrial cluster naturally align with global trends in AI policy. The focus on strengthening intellectual property protection in the AI field, promoting the intellectual property of AI innovation achievements, and improving international intellectual property protection mechanisms also demonstrates an awareness of global legal and economic frameworks. By fostering an open and integrated AI ecosystem and promoting cross-border cooperation, Shanghai aims to attract global talent, investment, and technological exchange, positioning itself as a key player in the international AI landscape. The establishment of an AI strategic advisory committee, potentially involving international experts, further signals an openness to diverse perspectives and global expertise in shaping Shanghai's AI future.

Implementation Timeline

Compliance Checklist

Sources and References