Shanghai's decision to boost the development of the artificial intelligence industry will promote the city's digital transformation and its efforts to build itself into an international AI highland, experts said on Friday.

On Thursday, the city's legislature passed a regulation on boosting AI, marking the first such effort in China at the provincial or municipality level. The regulation will take effect on Oct 1.

"This legislation, with the aim to promote (the AI industry), places emphasis on industry innovation and guidance for future development," said Yan Rui, director of legal affairs in the Standing Committee of the Shanghai Municipal People's Congress, at a media briefing on Thursday.

By giving full play to effective market and top-notch governance, the regulation intends to facilitate various incentives for the high-quality development of the AI industry, Yan said.

"Being the city's second bylaw in the digital economy, the regulation on AI will strongly support the digital transformation of Shanghai, and assist the creation of an AI highland with global influence."

One highlight of the AI regulation is that the municipal departments concerned could draw up lists of minor infractions during the development of the AI industry, which would not receive administrative punishment.

A certain degree of tolerance for such infractions is aimed at encouraging exploration of scientific frontiers and inspiring innovation, said Weng Guanxing, a lawyer at Shanghai-based law firm Wintell & Co.

"The essence of scientific research is that it is a process of constantly making mistakes and distinguishing right from wrong. So is AI. Therefore, it is also an international convention to allow for minor errors during the research and development process," Weng said.

The regulation gives a clear definition of AI and the AI industry, clearly defines government and various related divisions' responsibilities and management standards, and encourages innovative activities in the field by people, enterprises and organizations — all within the framework of established laws and regulations.

"The regulation stresses the importance of establishing a standard for AI that ranges from algorithm performance and data security, to privacy protection, product compatibility and more. This will greatly promote the formation of a collaborative industrial chain, and to ensure the healthy and orderly development of the AI industry," said Shi Zhiru, vice-president of Dgene Inc.

AI is one of the three leading industries along with integrated circuits and biomedicine and artificial intelligence that Shanghai is striving to develop by concentrating resources.

Shanghai's AI industry scale has expanded significantly in the past few years. In 2021, the combined output value of AI enterprises above a designated size, or with an annual revenue of 20 million yuan ($16.85 million) or above, reached 305.68 billion yuan, 2.28 times that of 2018, according to China Securities Journal.

The number of talented professionals working in the AI field in Shanghai has soared from 100,000 in 2018 to 230,000 in 2021, said a Xinhua News Agency report.

Local authorities will promote the building and use of public computing resource platforms and provide public computing power support for AI technology and industrial development, according to the regulation.

The regulation seeks to promote overall innovation and breakthroughs in the AI industry by supporting the development of AIrelated core industries and strengthening the agglomeration of AI enterprises.

The city will explore grading management and sandbox supervision, a flexible supervision system for technological innovation, to stimulate the innovation capacity of various entities and expand the development space for the AI industry, it said.