arcid CHINA POLICY B R I E F NATIONAL AI STRATEGIES AS AN ECONOMIC DRIVEN TOOL: CHINA AND THAILAND

By Panu Buranajarukorn and Phisut Apichayakul

Volume 2, No. 2 2019 Asian Research Center for International Development (ARCID) Mae Fah Luang University, Thailand

ISSN 2630-0877

ARCID China Policy Brief Volume 2, No. 2 2019

National AI Strategies As An Economic Driven Tool: China and Thailand

ARCID CHINA POLICY BRIEF Volume 2, NO. 2 2019 National AI Strategies As An Economic Driven Tool: China and Thailand © All Rights Reserved Author : Panu Buranajarukorn and Phisut Apichayakul ISSN : 2630-0877 First published in 2019 by ASIAN RESEARCH CENTER FOR INTERNATIONAL DEVELOPMENT (ARCID) School of Social Innovation, Mae Fah Luang University 333 Moo1, Thasud, Muang, Chiang Rai 57100, Thailand Tel : +66 5391 7137 Email : arcid.social-innovation.school@mfu.ac.th Website : chinawatch.today, social-innovation.mfu.ac.th/arcid.php Facebook page : www.facebook.com/ARCIDTHAILAND www.facebook.com/chinawatch.arcid Printed by Techno Printing Center 643 Utarakit Road, Wiang, Muang, Chiang Rai 57000, Thailand Tel/ Fax : +66 5371 8841 Email : tpccri@gmail.com

ARCID China Policy Brief Volume 2, No. 2 2019

National AI Strategies As An Economic Driven Tool: China and Thailand

Preface economic reforms and the opening up of the People’s Republic of China (PRC) to the outside W ith world by Deng Xioaping and post-Deng leaders, China is now the largest economy (on a purchasing power parity basis). All indications show that China will be a superpower. The meteoric rise of China in the 21st century signals the successful comeback of China in regaining its respectful place in regional and international affairs. It also means challenges as well as opportunities for other parts of the world, especially for countries in the Asia Pacific region. For many of us, the big question is: how should we deal with such a rising superpower? Other questions may include the following: Is China’s rise going to be sustained? What are the new directions mapped out by Xi Jinping to develop China? What sort of developmental challenges will it face? Is China a threat according to some analysts? How can we promote a win-win relationship with China? How can we manage our problems, if any, with China in order to preserve peace and development? To answer these questions, the Asian Research Center for International Development (ARCID) of the School of Social Innovation at Mae Fah Luang University has launched the China Watch Project with a grant from the Thailand Research Fund (TRF). We would like to express our thanks to the TRF for its funding support and suggestions in improving the project proposal. As part and parcel of the China Watch Project, ARCID has established a Monitor and Analysis (M & A) Unit surveying and analyzing major developments in China. Located in Northern Thailand, ARCID would like to take advantage of its geography and focus its research more on the Mekong region and its relations with East Asia, including China. We hope this strategy could help a young research center to establish a niche in the academic, intellectual and policy community. In this regard, the ARCID China Policy Brief is produced by the M & A Unit to examine policy issues on ASEAN-China relations in general and Thailand-China relations in particular. Inaugurated in August 2018, the ARCID China Policy Brief is published a few times a year. Finally, it has to be understood that the views expressed are those of the author.

Lee Lai To, Ph.D. Senior Professor and Director ARCID

ARCID China Policy Brief Volume 2, No. 2 2019

National AI Strategies As An Economic Driven Tool: China and Thailand

About the author Assistant Professor Dr. Panu Buranajarukorn Bachelor of Industrial Engineering (English Program) from Chiang Mai University. Master of Industrial Engineering (English Program) from Chulalongkorn University. Ph.D. in Engineering Management from University of Wollongong, Australia. Assistant Professor Dr. Panu Buranajarukorn has been a lecturer and researcher at the Department of Industrial Engineering, Faculty of Engineering, Naresuan University. He had worked with academic institutes and local industries. He has also worked closely with entrepreneurs to support business incubations and startup companies. He is the author of numerous publications on engineering management and industrial engineering. Dr. Phisut Apichayakul Bachelor of Engineering in Control Engineering and Master of Engineering in Electrical Engineering from King Mongkut’s Institute of Technology Ladkrabang. Ph.D. in Automatic Control and Systems Engineering from University of Sheffield, United Kingdom. He has been a lecturer at Department of Electrical and Computer Engineering, Naresuan University. He specializes in time series analysis, Kalman filter, EM algorithm, and spatio-temporal state space model.

ARCID China Policy Brief Volume 2, No. 2 2019

National AI Strategies As An Economic Driven Tool: China and Thailand

National AI Strategies As An Economic Driven Tool: China and Thailand Panu Buranajarukorn and Phisut Apichayakul 1. Artificial Intelligence (AI), An Introduction Artificial Intelligence or AI is defined as a generic term that refers to any machine or algorithm that is capable of observing its environment, learning, and based on the knowledge and experience gained, taking intelligent actions or proposing decisions [1]. The idea behind AI is to study how human intelligence work and create algorithm or machines that imitate human thinking and behavior. AI has been developed to the automated process. It has been initiated from the neural networks (1950-1970) to the machine learning (1980-2010) and to deep learning now in order to simulate the human intelligent processes (learning, reasoning, and self-correction by using the patterns of big data for delivering solutions to complex problems) and then train the machine to perform human tasks. The AI technology has included many technologies i.e. machine learning, neural networks, deep learning, cognitive computing, computer vision, natural language processing (NLP), graphic processing unit (GPU), internet of things (IOT), AI algorithm, application programming interface (API), etc. [2], [3]. Most of us may come across the phrase “Artificial Intelligence, AI”, but some are not aware of the impact of AI on our everyday life. The areas which could be impacted by AI, for examples, are healthcare, transportation, logistics, financial service, energy and manufacturing. Massive potential of AI had caught the world’s attention when AlphaGo, self-taught and no longer relying on human input, triumphed over the South Korean master of the GO game, Lee Sedol, in 2016 [4]. AI can solve a wide range of problems However, its use is currently limited to narrow and well-defined tasks. As such, AI continues to be applied in narrow or specialized AI functions including speech and image recognition, computer vision, and natural language processing. Machine learning—which is an application or subset of AI—has become powerful in recent years by providing the tools to learn automatically without being explicitly programmed. Nonetheless, there is still limited understanding of how AI will impact the way we think or make decisions, In terms of economics, AI is one of the keys to rapid productivity gains and the rise in economic gains. Global GDP could be up to 14% higher in 2030 as a result of AI and the greatest gains from AI are likely to be in China [5]. AI related technology empowers individuals, organizations and/or governments, to fill knowledge gaps, increase productivity and solve specific problems. At the national level, some countries are beginning to explore the competitive advantage across the full spectrum of AI deployment. Others are studying the potential benefits that AI can offer. Job opportunities will change in near future due to the advance of technologies especially with the introduction of AI. Job losses due to the automation system, safety and security of AI systems and autonomous weapons, for examples, are key issues provoking countries to be concerned with the development of AI technology. If governments are unable to foresee the situation and not well prepared to deal with the impact, their competitiveness both in terms of economics and security will fail to match with the others. AI is a critical arena of international competition. Countries around the world are rolling out AI initiatives to secure a favorable position in the new round of technological revolution. Some countries like the US, China and members of the European Union have a considerable head start in terms of investment and research. More than 20 countries have launched or have established committees to create national AI strategies [6], [7]. Every country calls for a better understanding of how AI will affect the development of the country and how to develop the knowledge and innovation using AI as a core strategy since it will ultimately impact the economic growth. Key responsibilities of the government would be to put the AI policy in place, mitigate the negative impact of workers’ displacement, create jobs in emerging sectors and build data ecosystems [6]. Many elements are included in the policy and/or development plan such as research and development, skill and education, public and private sector adoption, data collection and sharing, ethics and regulations. For this paper, the national AI strategies ARCID China Policy Brief Volume 2, No. 2 2019

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of China and Thailand are explored. From lessons learned from China, the way forward for Thailand’s AI policy and implementation is proposed in a summary. 2. Thailand 4.0 Today, global conditions have compelled Thailand to move toward the digital era in economic and social development. The technologies, used in normal life, have been changing rapidly. Some technologies need to be transformed, while some others have been disrupted. Thailand has launched the long-term national strategy in coping with the challenge and rapid changes of innovation and technologies. The key strategy for driving social and economic development have been set in the 20 Year - National Strategy (2018 - 2037) by the National Strategy Secretariat Office, Office of the National Economic and Social Development Board. This move specifies procedures for public involvement by any stakeholders in the formulation of the 20- Year National Strategy, including monitoring, inspection and evaluation, and measures for encouraging and supporting all civic sectors to comply with this long-term strategy. It also has been related to Thailand’s vision of becoming “a developed country with security, prosperity and sustainability in accordance with the Sufficiency Economy Philosophy” [8]. In the middle – term period of the 20-Year National Strategy framework, the 12th National Plan for economic and social development within 5 years (2017 – 2021) has been implemented for increasing economic growth and productivity by utilizing national wisdom and innovation as well as focusing on fundamentals of a sufficiency economy, sustainable development, and human centered development. Ten strategies have been positioned to obtain the major and minor targets of economic and social development [9]. The relationship of these strategies can be shown in Figure 1. Figure 1. The relationship between the 20-Year National Strategy and the 12th National Plan The 20-Year National Strategy: Security, Prosperity, and Sustainability The six key strategies: (1) national security; (2) national competitive enhancement; (3) human capital development and strengthening; (4) social cohesion and just society; (5) eco-friendly development and growth; and (6) public sector rebalancing and development

The 12th National Plan: Sufficiency Economy, Sustainable development, and Human centered development The ten strategies: (1) Strengthening and realizing the potential of human capital; (2) Creating a just society and reducing inequality; (3) Strengthening the economy, and underpinning sustainable competitiveness; (4) Environmentally-friendly growth for sustainable development; (5) Reinforcing national security for the country’s progress towards prosperity and sustainability; (6) Public administration, corruption prevention, and good governance in Thai society; (7) Advancing infrastructure and logistics; (8) Development of science, technology, research, and innovation; (9) Regional, urban, and economic zone development; (10) International cooperation for development

However, to achieve the goals of the National Strategy and Plan, the old engine driving Thai social and economic development today has not generated sufficient income to raise Thailand from a middle-income to a high-income country. Thailand has to make breakthroughs in moving itself towards Thailand 4.0 steadfastly by transforming the country with smart businesses utilizing advanced technology, innovation and creativity to produce value-based economy products and services in the era of digital and disruptive technology [9]. The four periods of Thailand’s economic development have been focused on the agriculture sector (Thailand 1.0), light industries with low labor cost (Thailand 2.0), heavy industries relying on foreign technologies (Thailand 3.0), and smart businesses of the value-based economy or innovation-driven economy (Thailand 4.0). The objectives of Thailand 4.0 have been cleared and endorsed for economic prosperity, social well-being, raising human values, and environmental protection. The Thai government has followed effective pathways for achieving the goals of Thailand 4.0 in promoting the creative economy [10], the startup businesses [11], and the 5 First and 5 New S-curve industries [12] by relying on innovation, technology and creativity. In the era of Thailand 4.0, the production technologies have been changed dramatically [13]. As such, businesses need to rethink by adapting themselves to the digital age in order to survive and grow. It has also been

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recommended that the strategy for doing businesses today is composed of five domains, namely, customers, competition, data, innovation, and value. Moreover, it is necessary to harness customer networks, and develop platforms, big data, rapid experimentation, and disruptive business models [14]. Gartner has suggested strategic trends of technologies for businesses to use in the digital and disruptive era [15], [16], [17]. These trends from year 2018 to 2020 are illustrated in Table 1. Table 1 Gartner’s strategic trends of technologies from Year 2018 to 2020 The Strategic Technology Trends for Business in the Digital Age Year 2018 Year 2019 Year 2020 1. AI Foundations 1. Autonomous Things 1. Hyper-automation 2. Intelligent Apps and 2. Augmented Analytics 2. Multi-experience Analytics 3. AI-Driven Development 3. Democratization 3. Intelligent Things 4. Digital Twins 4. Human Augmentation 4. Digital Twins 5. Empowered Edge 5. Transparency and 5. Cloud to the Edge 6. Immersive Experience Traceability 6. Conversational platforms 7. Blockchain 6. Empowered Edge 7. Immersive Experience 8. Smart Space 7. Distributed Cloud 8. Blockchain 9. Digital Ethics and Privacy 8. Autonomous Things 9. Event Driven 10. Quantum Computing 9. Practical Blockchain 10. Continuous Adaptive Risk 10. AI Security and Trust From Table 1, the one familiar strategic trend of using digital transformation of technology to support Thai businesses has been AI or Artificial Intelligence [13]. AI application has been utilized strongly to support business processes and daily life through digital transformation, such as automated customer support, personalized shopping experience, increasing efficient healthcare processes, automated financial advisor, smart cars and drones, travel and navigation, influencing decisions in social media, smart home devices, producing creative arts, and serving security and surveillance [18]. Businesses which need to transform their organizations digitally should recognize that AI strategies are composed of three stages, namely, (1) Evaluation of external environment, (2) Adding value proposition, and (3) Transforming organization and execution [19]. In doing business in the digital world today, it has not been as simple as before. The technologies used for supporting businesses have been changed and disrupted quite significantly. In Thailand, AI has not been the main focus. Nonetheless, it has been suggested as the one part of technology and innovation development to support business processes. Following the blueprint of Thailand 4.0, AI can be specifically applied to the following stages in driving Thailand 4.0, namely, (1) preparing human resources to the AI world, (2) developing cluster of AI technologies and industries, (3) Incubating and developing entrepreneurs’ and employees’ skills for the AI application, and (4) transforming enterprises to use AI so as to achieve global competitiveness. Through the implementation of Thailand 4.0 policy, AI, robotics and automation is one of the 10 S-Curve industries targeted by the government to drive economic growth in the future. Incentives are also offered by BOI (Thailand Board of investment), including corporate income tax exemption of up to 13 years, for project involving advanced technology such as AI and robotics. Apart from the robotics and automation manufacturing sector, agriculture sector, healthcare sector and tourism sector are other opportunities for the applicability of AI in Thailand.

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3. China’s Policy and Implementation Related to AI China is a pioneer in the field of AI both in terms of research and application. In 2017, China’s State Council issued a document, A Next Generation Artificial Intelligence Development Plan, as a blueprint charting the country’s approach to developing AI technology and applications, setting the goal to becoome “the world’s primary AI innovation center” by 2030. The document has been translated into English by a group of experienced Chinese linguists [20]. A three-year activity and implementation program as an extension of China’s informatization agenda from 2018 to 2020 was launched to step up research and development, industrial development, deployment and integration of AI across sectors [21]. The focus is the sectors on manufacturing, agriculture, logistics, finance, commerce and household goods. Additionally, China plans to utilize AI to increase the energy efficiency of the manufacturing sector by 10 percent. The Chinese national AI strategy consists of three-step objectives. First, by 2020,  the overall AI foundation theories, core technologies and application will match with globally advanced levels  AI industry’s competitiveness will have entered the first echelon internationally, since it is an important tool for economic growth  AI development environment will be further optimized , such as building innovation teams, and gathering high-level personnel  AI applications will become a new way to improve people’s livelihoods Second, by 2025,  major breakthroughs in basic theories for AI is a target  AI industry will enter into the global high-end value chain  AI laws and regulations, ethical norms and policy systems will be established initially  AI security assessment and control capabilities will be formulated Third, by 2030, China’s AI theories, technologies, and applications should achieve world-leading level, making China the world’s primary AI innovation center. Apart from the in place AI policy of the Chinese government, extraordinary resources are also provided to the AI push. In 2018, China’s AI development could be studied or examined from four perspectives, namely, science & technology output and talent input, industry development and market applications, development strategy and policy environment, and public perception and general impact [22]. China’s AI papers are increasing rapidly, scoring 27.68 as a percentage of the global total in 2017. These were mostly in the field of computer science, engineering, and automatic control systems and 42.64% of its top papers were products of international collaboration. China has become largest owner of AI patents, more than the U.S. and Japan. In this regard, the State Grid Corporation of China (SGCC) ranks fourth in terms of patent holder among enterprises globally. From the perspective of industry development and market applications, the number of Chinese AI companies ranks second in the world and Beijing has the highest concentration of AI companies. China’s AI market reached RMB23.7 billion in 2017 with computer vision as the largest segment. In terms of the development strategy and policy environment, China’s policy has passed through several stages in last ten years from IoT to big data to AI. Its main focuses are “Made in China”, innovation-driven development, IoT, Internet+, big data, and scientific and technological research & development. In the sector of public perception and general impact, the Chinese public has a high AI awareness and support AI development. More AI programs are offered in universities and received well by students. 4. The Way Forward for AI Related Technology and Ecosystem in Thailand According to the Thailand 4.0 policy, there is no clear policy directly supporting the development of AI technology and application. There are science and technology development related policy, new s-curve industry policy and research and innovation policy, AI related policy is implicitly embedded into such policies. The roadmap for AI technology and development is not explicitly stated as part of the Thailand 4.0 roadmap.

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From lessons learned in the case of China, a concrete AI roadmap of Thailand has to be laid down. The intuitive goals with focus tasks have to be set up for each period of time, for example, for the first 5 years, investment of basic research in AI and formulation of the ecosystem for AI technology development [20]. For the next 5 years, AI foundation theories, core technologies and applications should match with globally advanced levels. Focus tasks are a key to the successful implementation of AI policy. Examples of focus tasks are: establish basic theory systems for a new generation of AI, coordinate the layout of AI innovation platforms, and accelerate the training and gathering of high-end AI talent. Last but not least, resource allocation is important in supporting the national AI policy implementation, including the assessment mechanism. References 1. Joint Research Centre. (2018). Artificial Intelligence, A European Perspective. EU: the European Commission’s Science and Knowledge Service. 2. SAS. (n.d.). Artificial Intelligence (AI): Its’ definition and importance. Retrieved Friday 20, 2019 from the World Wide Web: https://www.sas.com/th_th/insights/ analytics/what-is-artificialintelligence.html. 3. TechTarget. (n.d.). AI in IT Tools Promises Better, Faster, Stronger ops. Retrieved Friday 20, 2019 from the World Wide Web: https://searchenterpriseai.techtarget.com/definition/AI-Artificial-Intelligence. 4. BBC News Online. (2016). Artificial Intelligence: Go Master Lee Sedol Wins Against AlphaGo Program. Retrieved Friday 20, 2019 from the World Wide Web: https://www.bbc.com/news/technology35797102. 5. PwC Global Artificial Intelligence Study. (n.d.). Sizing the Prize: What’s the Real Value of AI for Your Business and How Can You Capitalize? Retrieved Friday 20, 2019 from the World Wide Web: https://www.pwc.com/gx/en/issues/data-and-analytics/publications/artificial-intelligencestudy.html. 6. Saran, S., Natarajan, N. and Srikumar, M. (2018). In Pursuit of Autonomy: AI and National Strategies. Issue Briefs and Special Reports: November 16, 2018. 48 pages. 7. Dutton, T. (2018). An Overview of National AI Strategies. Retrieved Friday 20, 2019 from the World Wide Web: https://medium.com/politics-ai/an-overview-of-national-ai-strategies-2a70ec6edfd. 8. National Strategy Secretariat Office. (2018). The National Strategy (2018 – 2037). Bangkok: National Strategy Secretariat Office, Office of the National Economic and Social Development Board. 9. Office of the National Economic and Social Development Board. (n.d.). The Twelfth National Economic and Social Development Plan. Bangkok: Office of the National Economic and Social Development Board, Office of the Prime Minister. 10. Srirattana, J. (2018). Creative Economy and Thailand 4.0. Kasem Bundit Journal. Volume 19 Special Edition March 2018. pp.208-217. 11. Jitwirat, K. (2018). Startup Thailand 4.0. E-Book: OOKBEE. 391 pages. 12. Anuroj, B. (n.d.). Thailand 4.0 – a New Value-based Economy. Power point presentation. Bangkok: Thailand Board of Investment.

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13. Numnonda, T. (2019). The Smiling Curve: The Competition is at Starting and Ending Point of Business Processes. Retrieved Friday 20, 2019 from the World Wide Web: https://www.bangkokbiznews.com/blog/detail/648761. 14. Rogers, D.L. (2016). The Digital Transformation Playbook: Rethink Your Business for the Digital Age. US: Columbia Business School Publishing. 15. Gartner Inc. (2017). Gartner Top 10 Strategic Technology Trends for 2018. Retrieved Friday 20, 2019 from the World Wide Web: https://www.gartner.com/ smarterwithgartner/ gartner-top-10strategic-technology-trends-for-2018/. 16. Gartner Inc. (2018). Gartner Top 10 Strategic Technology Trends for 2019. Retrieved Friday 20, 2019 from the World Wide Web: https://www.gartner.com/smarterwithgartner/ gartner-top-10strategic-technology-trends-for-2019/. 17. Gartner Inc. (2019). Gartner Top 10 Strategic Technology Trends for 2020. Retrieved Friday 20, 2019 from the World Wide Web: https://www.gartner.com/smarterwithgartner/ gartner-top-10strategic-technology-trends-for-2020/. 18. Magnimind. (2019). 10 Powerful Examples of AI Applications. Retrieved Friday 20, 2019 from the World Wide Web: https://becominghuman.ai/10-powerful-examples-of-ai-applications553f7f062d9f. 19. Microsoft. (n.d.). AI Business School: Defining an AI Strategy. Retrieved Friday 20, 2019 from the World Wide Web: https://www.microsoft.com/en-us/ai/ai-business-school. 20. Webster, G., Triolo, P., Kania, E., and Creemers, R. (2017). A Next Generation Artificial Intelligence Development Plan. Retrieved Friday 20, 2019 from the World Wide Web: https://chinacopyrightandmedia.wordpress.com/2017/07/20/a-next-generation-artificialintelligence-development-plan/. 21. Webster, G., Creemers, R., Triolo, P. and Kania, E. China’s Plan to Lead in AI: Purpose, Prospects and Problems. Retrieved Friday 20, 2019 from the World Wide Web: https://www.newamerica.org/cybersecurity-initiative/blog/chinas-plan-lead-ai-purpose-prospectsand-problems/. 22. Chinese Institute for Science and Technology Policy at Tsinghua University. (2018). China AI Development Report 2018. China: Chinese Institute for Science and Technology Policy at Tsinghua University. 122 pages.

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ARCID CHINA POLICY BRIEF 1. Kavi Chongkittavorn, “New Challenges of Thai-China Relations”, Volume 1, No.1, July – August 2018 2. Bilveer Sigh, “The Uighur Issue in Thai-China Relations”, Volume 1, No.2, September – October 2018 3. Somchai Thamsutiwat, “ China’ s Railway Transportation Policy” , Volume 1, No. 3, November – December 2018 4. Piti Srisangnam, “Lancang– Mekong Cooperation: Turning A Trust Crisis into Sustainable Development”, Volume 2, No.1, 2019 5. Panu Buranajarukorn and Phisut Apichayakul, “National AI Strategies As An Economic Driven Tool: China and Thailand”, Volume 2, No. 2, 2019

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ISSN 2630-0877