The Impact of China’s 'Fuzzy Logic' Legal System on Chinese AI Development

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The broad aim of this research is to examine the extent to which Chinese laws and policies on cyber and network security act as a constraint on the emergence of Chinese entrepreneurialism and innovation. This thesis begins by exploring the contradictions and tensions between China’s innovation policies (Internet Plus) and its regulatory restrictions on networks and data (Network Sovereignty), focusing specifically on whether data localisation policies in China’s Cyber Security Law will hinder Chinese firms’ innovation and global reach. The Cyber Security Law (2017) is the doctrinal centrepiece of China’s Network Sovereignty conceptions. More specifically, this thesis focuses on how data localisation laws (as part of Network Sovereignty) affect innovation in artificial intelligence (‘𝗔𝗜’), a key component of Internet Plus. This is achieved by explaining how these developments (globalised research and development networks, and the increasing use of open-source platforms by leading Chinese AI firms during 2017–19) exacerbated the apparent contradiction between Network Sovereignty and Chinese innovation. It is shown that the drafting of the Cyber Security Law did not anticipate the changing nature of globalised AI innovation. However, the main argument of this thesis is that the deliberate deployment of what the thesis refers to as ‘fuzzy logic’ in drafting the Cyber Security Law allowed regulators subsequently to interpret key terms regarding data in that Law in a fluid and flexible fashion to benefit Chinese innovation. There are still numerous uncertainties surrounding the interplay between Network Sovereignty and innovation in China, which cannot be resolved at this stage. How China’s Cyber Security Law is eventually enforced, in a world of global open innovation in AI, will have a major bearing on Chinese progress as a potential world leader in AI technologies. The documentation in this thesis of the evolution of the Cyber Security Law and associated regulations during the period 2015–19 advances the current law and technology literature regarding the nature of vague legislative decisions in Chinese technology lawmaking. Specifically, the analysis in this thesis of the implementation of the data localisation provisions under the Cyber Security Law using the concepts of fuzzy logic and policy petri dishes adds to the literature on regulatory practice in China. Importantly, this thesis also explains the problematic relationship between open-source platforms and data localisation.
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