Global AI Competitiveness Index Flags Governance Gap As EU Sets Rules And US, China Scale Up

A new Global AI Competitiveness Index flags a widening governance gap as the European Union emerges as the world’s de facto rule setter for artificial intelligence while the United States and China retain an edge in deployment. The Global AI Competitiveness Index, which tracks AI governance and regulation across about 25 jurisdictions and includes Hong Kong’s Financial Services Development Council as an observer, identifies three competing models: the EU’s rights based AI Act, a more market led US approach and China’s state directed system. It argues that clear rules and enforcement capacity are becoming a driver of investment rather than a drag on innovation, with finance singled out as a test bed for AI for finance oversight in Hong Kong. The report warns that countries with weak supervision risk brain drain and capital flight as the Global AI Competitiveness Index framework gains influence with policymakers and investors.

Dr Patrick Glauner, Professor of AI at Deggendorf Institute of Technology, a co-author of the report and part of the Index’s AI Committee, notes that “compliance costs for small enterprises could dampen innovation unless matched with fiscal incentives and technical assistance, and regulatory protection is not innovation in itself. Europe must demonstrate that ethical leadership does not become ethical isolation.” Dr King Au, Executive Director of the FSDC, which served as an official observer of the report, noted, “Responsible AI governance is essential to sustaining investor confidence and systemic stability in financial markets. The FSDC is delighted to contribute to a study that elevates Hong Kong’s position as a leading model of accountability and innovation in the global AI landscape.”