The world’s auto market is in the doldrums and China, as the world’s largest auto market, has suffered almost two-years of starkly declining sales and now the novel coronavirus (COVID-19) epidemic has crashed the already anemic sales.
The automotive sector has been heading for disruption for some time now. The virus outbreak may have pushed matters further. China signaled its intention to play a key role in the development of autonomous vehicles when on 24 February 2020 eleven central level Chinese governmental departments jointly issued the Strategy for Innovation and Development of Intelligent Vehicles (the “Strategy”). 
The Strategy sets forth a blueprint as to how the Chinese government will boost the development of autonomous vehicles over the next thirty years.
The highlights of the Strategy are as follows:
We are all in it together – Cross governmental cooperation
The Strategy shows that the Chinese government is united in pushing forward autonomous vehicles. Previously, in January 2018 China’s National Development and Reform Commission (NDRC) issued a draft Strategy for Innovation and Development of Intelligent Vehicles (the “2018 Draft”) for public comment. This time 11 central Chinese governmental departments were involved. This level of cross department involvement makes it clear that there is a consensus that intelligent vehicles will be disruptive and will also cut across crucial sectors such as automotive, transportation, telecommunications, mapping etc. Dealing with the disruption will require coordination between governmental departments.
The Strategy makes it clear that intelligent vehicles are the future of the global automotive industry and that China is no exception.
Rather than shying away from the disruption of a key pillar of industry the Chinese government believes China has strategic advantages in the development of intelligent vehicles – including the mass market; new technologies; 5G; infrastructure; Beidou satellite system; and smart city development level. However, it is not just China business that confers an advantage but also Chinese consumers and their willingness to adopt autonomous technology are seen as a strategic advantage.
The NDRC’s 2018 Draft Strategy laid out a 3-phase vision as to how intelligent vehicles will develop in China.
The Strategy provides an exciting but more realistic vision that by 2025 a comprehensive system comprising of technological innovation, industrial ecosystem, infrastructure, regulations and standards, product regulating and cybersecurity has been basically established – all aimed at providing an ecosystem for intelligent vehicles to develop in China. By 2025 the goal is to have conditional autonomous vehicles (i.e. L3) in large scale production and high-level autonomous vehicles (i.e., L4 or above) commercialized for specific environment; smart cities will have intelligent transportation systems; and 5G should be blanketing cities and highways.
The second phase (2035-2050) – is understandably less mapped out. The goal is for the China standard intelligent vehicle system to have been fully completed, and that China has achieved its goal to be an intelligent vehicle powerhouse.
(1) Establish open technology innovation system
The Strategy stresses the aim to make breakthroughs in key fundamental technologies such as complex system architecture, environment perception, intelligent decision control, human-computer interaction and human-computer co-driving, vehicle-road interaction and cybersecurity, high-precision spatiotemporal benchmark services and basic maps for intelligent vehicles.
The Strategy also states to establish and improve intelligent vehicles testing and appraisal system and carry out more testing in pilot areas.
(2) Establish ecosystem
The Strategy stresses that intelligent vehicle industry not only will result in but actively requires disruption. China will need R&D in new areas such as high-precision automotive sensors; vehicle grade chips; and intelligent operating systems.
The Strategy encourages disruption – auto companies need to become intelligent vehicle companies; auto component suppliers need to become system integration suppliers; AI and internet companies will need to step up to become leaders in autonomous driving system solutions; information and communications companies will need to develop into intelligent vehicle data service providers, transportation infrastructure-related companies will need to become solution providers.
The Strategy encourages domestic and international companies to strengthen cooperation, jointly carry out basic research, technological development and commercialization, and encourage international companies to actively participate in the development of the intelligent vehicles in China.
The Strategy also wishes to build international industrial cooperation platform and reinforce the international mutual recognition and adoption of certification and accreditation results.
(3) Establish advanced infrastructure system
The Strategy outlines the building of intelligent infrastructure for intelligent vehicles. This includes building intelligent road infrastructure, deploying 5G commercial applications, building wide-ranging wireless communication network for vehicles; and deploying narrowband Internet of Things in bridges, tunnels, parking lots and other transportation infrastructure.
The Strategy also mentions the development of basic maps for intelligent vehicles with unified standards, establishment and improvement of geographic information system and providing real-time dynamic data services.
High-definition (HD) map is a crucial technology in autonomous driving technology. However, in China, mapping activities are strictly regulated due to national security concerns. The strict regulation of mapping activities in China has hampered the development of autonomous driving technology. The development of basic maps for intelligent vehicles as set forth by the Strategy is an effort by the Chinese government to meet the needs of HD mapping in the market by relaxing regulations in mapping activities.
(4) Improve laws and standards
The Strategy stresses the importance of improving laws and standards for intelligent vehicles. The priority areas include the identification of “robot driver”, liability, cybersecurity and data management in relation to intelligent vehicles and also ethical research, clarification of legal rights, obligations, responsibilities of stakeholders and road testing.
The Strategy also states the need to revise and improve China’s Road Traffic Law and surveying and mapping law for intelligent vehicles.
Except for the road testing regulations, Chinese laws have yet to be adapted for autonomous vehicles. A balance will need to be struck – too early as premature regulations may create artificial barriers that may retard growth and development of emerging technologies. A failure to regulate in time may result in safety-issues and a backlash against new technologies.
(5) Establish a comprehensive cybersecurity system
The Strategy emphasizes the strict implementation of PRC cybersecurity laws and regulations and level protection, improving intelligent vehicles cybersecurity management system, establishing security responsibility system covering key sections of the industry chain such as automobile manufacturing enterprises, electronic parts suppliers, network operators and service providers.
The Strategy further stresses the need to strengthen the supervision and management of data security, which includes establishing a security management mechanism covering the whole life cycle of data of intelligent vehicle, and defining the data security protection responsibilities, implementing classified and hierarchical management of important data, ensuring the security and controllability of user information, vehicle information, surveying and mapping geographic information and strengthening the assessment of cross-border data transmission.
The Strategy has been warmly welcomed by the market in China.
The Strategy lays out a comprehensive and detailed plan for the development of autonomous vehicles in China. China clearly recognizes the advantages it has in data, market, technology innovation, infrastructure and environment to build an autonomous car manufacturing titan. The Strategy also recognizes and seeks to address some of China’s disadvantages – restrictions on mapping and slow changes to relevant laws.
Black swan events are unforeseen and unexpected. An unexpected result of the virus outbreak is that the inevitable disruption and move to autonomous new energy cars will be sped up. An already weakened traditional auto sector may find it has no choice but move to new technologies.