(Yicai) Jan. 6 -- In the era of artificial intelligence, China has relatively prominent comparative advantages in energy, talent, and system.

The rapid development of AI is significantly raising energy demand. China and the United States are expected to contribute nearly 80 percent to the incremental energy demand in the coming years, according to calculations by the International Energy Agency.

China contributed 61 percent of the global new photovoltaic installed capacity and 69 percent of the new wind power installed capacity in 2024, per data from the International Renewable Energy Agency. The country’s onshore wind power and PV power costs were only 2.9 US cents and 3.3 US cents per kilowatt-hour, respectively, both below the global average.

‘East Data, West Computing,’ China’s national computing network strategy synergizing East and West, matches energy advantages with computing power demand, enables cross-regional dispatching through ultra-high-voltage transmission technology, and directly converts low-cost green energy into scalable computing power resources.

In the energy competition for AI, China holds an advantageous position. It not only possesses the world’s largest incremental renewable energy capacity but also has an industrial chain system able to convert energy into computing power and the organizational capability to achieve cross-regional and cross-industry coordination through national-level projects.

These structural advantages were accumulated over a long period of time, from grid construction to energy structure adjustment, from industrial policies to engineering systems.

AI requires a large number of engineers, a user community sensitive to technological updates and iterations, and a huge market that can sustainably provide data, feedback, and real-world application scenarios. China possesses all of them.

The number of graduates from science, technology, engineering, and mathematics majors in China exceeded the combined total of the second- and third-ranked countries in 2020, forming the world’s most extensive supply system of engineers, according to data from Georgetown University.

These engineers are highly integrated with the industrial chain and possess strong application orientation and engineering capabilities, enabling technologies to be transformed into products, integrated into industries more quickly, and verified and iterated in large-scale scenarios more rapidly.

China has the world’s largest mobile internet population. The digital economy accounts for over 40 percent of its gross domestic product. AI can quickly enter a large number of real scenarios, such as logistics, manufacturing, healthcare, and retail, and complete rapid iterations in applications.

Young users are highly receptive to technology, and the ability of middle-aged and elderly users to adapt to digitization is also rapidly improving. The digital divide is gradually narrowing, creating a broad social foundation for the popularization of AI.

Organizational capabilities at the institutional level are another significant advantage. Cross-departmental resource coordination, large-scale deployment of computing power infrastructure, long-term support from financial tools, and coordinated development of the industrial chain are all required in the era of AI.

As an economy with a vast unified market, China can deploy a national computing power network, build large-scale data center clusters, promote market-oriented reforms of data elements, and form a cross-industry chain collaboration system within a relatively short period of time. With clear policy directions, strong execution power, and acute feedback, systematic technologies can be coordinated and popularized nationwide.

Moreover, China’s policy banks, industrial funds, government-guided funds, and multi-level capital markets jointly form a financing system that suits AI’s characteristics of heavy investment and long cycle, providing patient capital that the market is unable to fully invest in an industry with strong externalities.

The authors of this article are Cheng Shi, chief economist at Industrial and Commercial Bank of China International, and Xu Jie, senior economist at ICBC International.

Editor: Futura Costaglione