China betting big to ‘leapfrog’ over the West, Rudd says

China has bet big on artificial intelligence (AI) as an economic driver to leapfrog over the West, former prime minister Kevin Rudd has warned after returning from Beijing.

Speaking at the Australian National University on Wednesday, Rudd said Xi Jinping views AI as a “turbocharging device” to lift productivity across all sectors of the economy.

“New quality productive forces, driven by artificial intelligence and other advanced technologies, represents for them not just a means by which to catch up with the US across the AI stack,” he said.

“Not just to keep pace with the US and the collective West in terms of where artificial intelligence is reached, but to now leapfrog the West.”

Rudd suggested Xi believes that an AI-driven shift could affect both goods and services, creating an alternative to the free market for the first time in economic history.

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“No more invisible hand of the market. The explicit term now used in the... Chinese ideological literature is the visible hand of the state,” he said.

This invisible hand, Rudd explains, works mysteriously in an economy to allocate resources to where there is demand or low supply.

China has seen declining economic growth since its 1960s peak, with a particularly low period over the past three years, according to the World Bank.

Its gross domestic product reached about $US19.6 trillion ($AUD27.3 trillion) last year.

About $1.7 trillion was from a trade surplus across the world, which Rudd said remains the “most powerful engine room” in China.

Rudd said keeping an eye on ideological change is important as it feeds into policy and behavioural changes later on.

“Where the Chinese economy goes now fundamentally determines the future of Chinese power in the region and the world,” he said.

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“And Xi Jinping has made an enormous bet on his techno-industrial strategy.

“He has said that this will transform China’s economic paradigm. He has said that it will also lift, in time, China’s at-present languishing private domestic consumption within the economy.

“And that when the private sector gets on board, it will also contribute to a further generation of fresh levels of growth in private fixed capital investment.”