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Understanding the Shanghai AI Regulations

By Securiti Research Team
Published September 26, 2023

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AI is no longer the future; it has well and truly become the present. What may have seemed like science fiction a few years ago has become mainstream. This has seismically impacted countries' attitudes toward AI development worldwide. Proactive measures are being undertaken to ensure no gulf in technology occurs.

The Regulations for the Promotion of the Development of the Artificial Intelligence Industry in Shanghai Municipality, more commonly known as Shanghai AI Regulations, intend to lay the groundwork for Shanghai to be China's AI-related innovation hub.

Passed at the 44th meeting of the Standing Committee of the 15th Shanghai Municipal People's Congress on September 22, 2022, these regulations introduce a set of instructions on how the local bodies in Shanghai, particularly at the municipal level, can leverage supercomputing infrastructure, data centers, financing, human resources, and AI technological leaps for the benefit of the city's AI industry and its overall governance.

The regulations came into effect on October 1, 2022. Here's all you need to know about these regulations.

1. Applicability

The regulations apply to all activities directly and indirectly related to the development of AI Science & Technology (S&T), industrial development, application empowerment, and industrial governance within the administrative region of Shanghai.

2. The Objective of Shanghai AI Regulations

The main objective of the regulations is to strengthen Shanghai's leadership at all levels, including the municipality, district, and township, to organize the formulation of AI industry development plans and incorporate them into national economic and social development plans.

In addition, the regulations also offer in-depth guidance on conflict resolution of major issues in AI S&T innovation, industry cultivation, application scenario construction, and industrial ecosystem construction.

3. Key Provisions & Subsequent Guidelines For Local Bodies

Here’s what each of the Shanghai AI Regulation’s key provisions states about the role and responsibility of the municipal government as well as other relevant departments:

a. General Provisions

The regulations provide for the responsibilities of the municipal government, district governments, and township governments for the purposes of strengthening the AI industry. For example, the regulations task the municipal governments to undertake appropriate measures to encourage all citizens and organizations to carry out innovative activities within the field of AI as long as laws, regulations, and relevant national and municipal regulations do not prohibit such activities.

The municipal governments are also required to proactively seek international cooperation via regular participation at the China International Import Expo, World Artificial Intelligence Conference, and other exhibitions to provide an appropriate cooperation platform for all relevant stakeholders in the development and governance of the AI industry.

Similarly, the municipal government is also tasked with undertaking appropriate measures to promote the popularization of AI S&T by publicizing new developments, achievements, and breakthroughs within the AI industry via the use of radio, television, newspapers, and the Internet.

b. Basic Factors of Production

The regulations require the Municipal Economic & Informatization Department, the Municipal Development & Reform Department, and other relevant departments to collaborate and strengthen the planning of "computing power" infrastructure, promote the green and low-carbon development of such infrastructure, and support relevant entities that carry out the construction of the infrastructure. The Municipal Economic & Informatization Department is directly responsible for collaborating with other departments within the municipality and S&T departments to develop measures and mechanisms guaranteeing the stable supply of computing power resources.

To achieve the above goals, the municipal government is responsible for taking, among others, the following steps:

  • implement and develop the "East-West Compute Transfer" project, cooperate with the other provinces and cities in the Yangtze River Delta to build the national hub node for the national integrated big data center system;
  • undertake appropriate measures to optimize the layout of the data center, improve the cross-network and cross-regional interaction capabilities, and develop appropriately designed localized data centers of their own to meet the demand computing demands of the AI industry in Shanghai;
  • initiate steps to promote the construction of high-quality data sets in the AI field; and
  • encourage all organizations involved in developing AI applications to carry out their transactions via the Shanghai Data Exchange to create data value and ensure all data circulation is done in accordance with the appropriate laws and regulations.

c. S&T Innovation

With respect to bringing S&T innovation in the region, the municipal government is tasked with the following:

  • formulating policies and mechanisms that encourage and incentivize educational and research institutions to carry out basic theoretical research and R&D on major scientific issues within AI;
  • dedicating special resources to strategic emerging industry projects with support for AI industry innovation, industrial foundation reengineering, and demonstrable industrial applications;
  • promoting the reform of any existing scientific research projects and methods by empowering AI innovation teams, promoting talents with greater technical approach decision-making authority, and adopting a flexible salary system to introduce incentive measures for researchers within major AI S&T research projects; and
  • establishing incentive mechanisms to promote all S&T theoretical achievements into practical applications within the AI field.

d. Industrial Development

The regulations require the municipal government to ensure that it can provide a suitable environment for the AI industry by undertaking measures to improve the construction of the AI ecosystem with both software and hardware integration, strengthening the concentration of AI organizations, and developing a sound AI production chain. In this regard, the municipal governments may leverage any and all industrial advantages to promote the high-quality development of basic hardware, critical software, and smart products via a strong policy support and innovation incentivization system in place.

In relation to the development of AI in specific sectors, the regulations require the municipal government to take appropriate measures. For example, the municipal government should encourage the development of the unmanned aerial vehicle (UAV) industry, unmanned surface vehicle (USV) industry, civil unmanned aviation test bases, UAV take-off and landing points, and UAV operation and management service platforms. Similarly, the municipal government should extend its support in the R&D of critical AI medical devices by funding breakthroughs in intelligence-assisted diagnostic algorithms, surgical positioning, and navigation, guidance services for registration and approval of AI medical devices, and supporting entry of relevant developed products to the special approval process for national innovative medical devices.

e. Application Empowerment

The municipal government should also undertake measures to promote the large-scale application of the developed AI theoretical and research breakthroughs into everyday life, urban governance, digital transformations, financial leasing, and several other critical products related to R&D, manufacturing, management, and service. To achieve this goal, the municipal government should collaborate proactively with various other relevant departments to regularly update the AI demonstration application list while also producing appropriate guidance material.

f. Economic Applications

The municipal government must also promote deep integration and innovation within the integrated application of critical technical equipment related to AI, IT, smart manufacturing, and industrial internet systems. Following are some of the areas where the municipal government can play its role in relation to the economic applications:

  • It should undertake measures to promote the digitalization and upgradation of cargo management, transportation services, and station facilities;
  • It should ensure the integration of developed AI technology within the medical field, build intelligent medical infrastructure, establish a new model for medical services, improve medical innovation, and promote the digital transformation of the medical field;
  • It should undertake appropriate steps to improve the quality of urban elder care and upgrade the urban elder care infrastructure by adopting AI technology, intelligent terminals, and convent elder care services; and
  • It should promote the integration of AI and big data within the financial industry to improve overall financial data processing and promote intelligentization transformation and service innovations.

g. Urban Governance Applications

The regulations require the municipal government to take appropriate steps to integrate AI into its urban governance capabilities and increase the use of such AI technology within informationized government systems by constructing "unified online government services." In this regard, the municipal government is required to:

  • promote the use of AI within its various monitoring, sensing, implementation, and integration plans related to the integration of AI technology and Internet of Things applications between the physical and digital city;
  • leverage AI applications in urban governance to focus on various overall operations such as traffic management, public safety, planning and construction, ecological environment protection, and community governance and improve the overall decision-making efficiency and response capabilities; and
  • undertake proactive measures to support the construction of a smart justice system that integrates AI capabilities within functions such as data application, judicial disclosure, and dynamic tracking to improve the intelligentization of the judicial system.

h. Industry Governance Applications

The municipal government is also tasked with adopting a holistic approach toward national security and undertaking steps to integrate AI applications within the production and supply chains. For this purpose, it is required to establish an AI ethics expert committee to work directly under its supervision and perform the following tasks:

  • Formulate ethical norms and guidelines for the AI field;
  • Create guidance material for education and research institutions, enterprises, and other relevant organizations on how to responsibly conduct research and come up with ethical theories in the AI field;
  • Encourage organizations in the AI field to establish ethics and security governance systems;
  • Conduct risk assessments of AI applications that involve health, public safety, and life;
  • Provide ethical advice and decision-making consulting services for other relevant departments within the AI field;
  • Provide educational material on ethics and safety in the AI field.

i. Other Applications

The municipal government should also encourage the application of AI technology to improve the matching and predictability of all information searches and expand content production and interpersonal interactions on social media. The regulations require the municipal government to promote the normalization of the integration of AI in teaching, management, resource construction, and other end-to-end applications to facilitate the establishment of a new kind of modern education and innovative talent training system.

4. Regulatory Authorities & Responsibilities

The municipal government is tasked with establishing a Municipal Artificial Intelligence Strategy Advisory Expert Committee, with appropriate personnel and experts from various institutes, to provide appropriate advice in all major decision-making matters related to the development of the AI industry within the municipality.

Additionally, as per the regulations, different municipality departments have been entrusted with different responsibilities with respect to the development of the AI industry, which are detailed below:

a. Economic and Informatization Departments

The Municipal Economic and Information Departments are the primary departments responsible for overseeing the various tasks related to planning, implementing, promoting, and coordination within the AI industry.

b. Development and Reform Departments

The Municipal Development and Reform Departments coordinate infrastructure construction related to various projects within the AI industry.

c. Science and Technology Departments

The Municipal S&T Departments play a supportive role in advancing innovation and theories, developing key technologies, promoting AI governance, and assisting in constructing major S&T innovation bases.

d. Cybersecurity and Informatization Departments

The Municipal Cybersecurity and Informatization Departments coordinate all cybersecurity and informatization-related tasks related to the development of the AI industry and laying down the groundwork for appropriate network information content governance and supervision management work.

e. Market Supervision Departments

The Municipal Market Supervision Departments oversee all tasks related to the AI industry measurement, inspection, certification, accreditation, and standards that are responsible for product quality supervision.

The Municipal State-owned Assets Supervision & Administration, Human Resources, Social Security, Education, Health, Finance, Statistics, and National Security Departments will be responsible for formulating relevant policies and measures within their jurisdiction related to various facets of the AI industry relevant to them.

Each relevant department will be able to formulate its own distinct list of non-administrative penalties for minor violations within the AI industry. Such non-administrative penalties will encourage all legal persons, organizations, and entities to strictly comply with all relevant regulations via a combination of guides, educative material, and criticism through scheduled conversations.

5. How Securiti Can Help

The Shanghai AI regulations present the municipal government and all other relevant departments with a comprehensive roadmap of how they must contribute to ensuring Shanghai becomes a hub of AI innovation.

While the regulations press upon the relevant departments to do everything within their power and resources to enable this planned growth, it is verbose and strict on how every initiative must be within the confines of the appropriate local and national regulations.

Hence, compliance with China's three distinct data privacy laws is paramount for an organization hoping to contribute meaningfully to Shanghai's ambitions to become a leader in AI innovation.

Securiti is a market leader in providing enterprise data privacy, security, governance, and compliance solutions. Its plethora of modules and products are designed to ensure compliance with all major data regulations worldwide, including China.

Request a demo today and learn more about how Securiti can enable effective and efficient data compliance, allowing your organization to shift its focus and efforts toward making headways in AI innovation.

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