China's Ambitious AI Content Labeling Initiative: Balancing Innovation and Regulation

China has big plans for AI content labeling.

A new regulation drafted this month aims to legally enforce a similar system to voluntary global initiatives like C2PA Authentication. If enacted, AI providers in China must add explicit labels and metadata encryption to AI content, or face government penalties. Social media companies will also need to scan for these watermarks to label content on their platforms, and add more information to help track its journey online.

China's Plan to Make AI Watermarks Happen

Audio morse codes, encrypted metadata information, or labels in virtual-reality-generated scenes. These are some of the things the Chinese government wants AI companies and social media platforms to use to properly label AI-generated content and crack down against misinformation. On September 14, China's Cyberspace Administration drafted a new regulation that aims to inform people of whether something is real or AI. As generative AI tools get increasingly advanced, the difficulty to discern whether content is AI-generated is causing all kinds of serious issues, from nonconsensual porn to political disinformation. China's is not the first regime to tackle this issue -- the European Union's AI Act, adopted this March, also requires similar labels; California passed a similar bill this month. And China's previous AI regulations also briefly mentioned the need for gen-AI labels. However, this new policy outlines more details of how AI watermarks should be implemented by platforms. For the first time, it also promised to punish social media platforms where AI-generated content is posted and travels far without being properly classified. As a result, there are a lot more financial and legal stakes for AI companies and social platforms if they are tempted to take the shortcut and not instate proper labeling features. With the speed and proactiveness of its AI legislation, China is hoping to be the domineering regime shaping global AI regulation. "China is definitely ahead of both the EU and the United States in content moderation of AI, partly driven by the government's demand to ensure political alignment in chatbot services," says Angela Zhang, a law professor at the University of Southern California studying Chinese tech regulations. And now it has another chance at shaping global industry standards, because "labeling is a promising area for global consensus on a certain technical standard," she says. For the first part, the new draft regulation asks AI service providers to add explicit labels to AI content. This means watermarks on images, "conspicuous notification labels" when an AI-generated video or virtual reality scene starts, or sounds of the morse code of "AI" (· - · ·) before or after an AI-generated audio clip. These are, to different degrees, practices that the industry is already employing. But the legislation would change them from voluntary measures into legal liabilities and would force those AI tools with loose labeling mechanisms to catch up or face government penalties. But the problem with explicit labels is that they are usually easy to alter, like cropping out a watermark or editing out the video ending. So the legislation also requires companies to add implicit labels into the metadata of AI-generated content files, which should include a specific mention of the initialism "AIGC" as well as encrypted information about the companies that produced and spread this file. It also recommends these companies add invisible watermarks in content so users won't realize they are there. In reality, the implementation of implicit labels in metadata would require a lot more companies to work together and adhere to common rules.