China

Artificial Intelligence Will Bring Social Changes in China

The recent release of ChatGPT and, even more recently, GPT-4 has demonstrated the power and productivity of generative artificial intelligence (AI). Now generative AI engines can write articles, file taxes, understand images, as well as match or even exceed human performance in many other tasks.

More importantly, generative AI engines are still rapidly evolving, and we can expect that in the near future AI will disrupt more industries. The technology industry is extremely excited about the development of generative AI and actively discussing how to utilize generative AI for various business opportunities.

The dark side of generative AI is that it is going to replace a lot of jobs, starting with jobs in the service sector, such as accountants, bank tellers, insurance agents, administrative assistants, customer service personnel, and many more. If the invention of steam engines 300 years ago signified the beginning of the industrial revolution, then the invention of ChatGPT may signify the beginning of the service revolution today. We are living in the exciting era of the whole human society transitioning through the service revolution – but transitions are always painful, as experienced by people in the industrial revolution era, no matter how promising the future looks.

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AI will bring social changes in China, just like every other country. How might the Chinese government adapt to these changes?

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Examining China today, the agricultural sector contributes 7.9 percent to GDP, the industrial sector 39.4 percent, and the service sector a whopping 53.3 percent. Also, 22.9 percent of China’s workforce are employed in the agricultural sector, 29.1 percent in the industrial sector, and 48 percent in the service sector. Thus, the service sector is the biggest sector in the country, with the highest GDP per capita and the majority of the workforce participating in this sector.

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With half the population in the service sector, any change to this industry will greatly impact China’s social stability – especially a disruptive change brought by generative AI. Many Chinese parents pour enormous amount of resources into their children’s education in order to secure high-end white-collar jobs for their children in the service sector. For this generation of anxious parents, when their children go through university education, these jobs may have already been taken over by AI.

Before examining the impact of AI on China’s society, however, let us review China’s long-standing social contract between the state and the people from a historical perspective. Until a few decades ago, China had always been an agricultural nation, such that for thousands of years the core production resource was land. There existed a clear social contract between the state and the people, where the state kept the people under control through land allocation, and in return the people cultivated the lands and gave back a fraction of their production in the form of taxes to sustain the state’s operation.

In the past few decades, as China transitioned from an agrarian society to an industrial powerhouse and then to a service society, the state also imposed tight controls on production resources such as energy, telecommunications, and transportation through state-owned enterprises (SOEs). In this setup, the state ensured its control over the provisioning and controlling of critical production resources, as well as generating profits indirectly through the SOEs. But the social contract between the state and the people remains the same: The state provides production resources; the people cultivate these resources to make a living and pay taxes to the state.

So, if the same social contract persists, instead of having the people cultivating land provided by the state and paying taxes to the state, the new generation of Chinese people will cultivate AI models provided by the state and pay taxes to the state in return. From this perspective, China’s government will definitely monopolize AI, potentially through a new SOE as previously discussed.

However, AI, unlike previous production resources such as land and energy, is meant to be monopolistic, in the sense that the best engine will monopolize the whole market. Also, land and energy require human labor to generate products; AI is here to replace humans. In this context, whoever is able to utilize generative AI can create enterprises with minimal human involvement to provide services to other people.

Maybe one day human society as a whole will find a way to fully cooperate with AI for everyone to be productive, similar to how we found a way to work with machines in an industrial society. Before we get there, the Chinese government faces a dilemma of transitioning society through the service revolution.

The first choice is to retain the status quo and not let AI take over jobs. This may ensure short-term social stability but is obviously not a wise choice in long term. AI will bring a tremendous boost of productivity; not integrating AI into the society will stagger China’s progress when competing with other countries in the world.

The second choice is to shift people back to the agricultural and industrial sectors, hence reducing the labor supply in the service sector. This seems to be already happening, in recent years, China started to promote vocational education instead of college education to increase labor supply in the industrial sector. One specific example is that many vocational schools are teaching students how to operate simple robots in textile factories, so that students learn to cope with AI-powered robots to boost productivity in the industrial sector.

One caveat of this approach is that it may lead to a widening income gap, such that only a small percentage of elite students receive university education and high-paying jobs while the majority have to stick with industrial jobs. This will leave a lot of Chinese parents unhappy, especially white-collar parents who view this as their children falling out of their social class. Hence, a propaganda campaign to reshape people’s perception needs to be engineered to shepherd the social change brought by this choice.

The key question, though, is whether AI will eventually bring a change to the social contract between the state and the people that has existed for thousands of years. In the new social contract, the people will allow the state to own the monopolistic AI engine, will trust the state with their data, and will allow the ubiquitous integration of the state AI engine into their daily lives. In return, the state will provide basic social security for the people to live a decent life, with or without a job. In other words, will AI be powerful enough to transition China into a real socialist state?

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