Despite Google's website, cloud services and video platform YouTube being now blocked in China, the company has continued to engage with the market.
The news comes as China's government and tech companies race ahead to dominate the field, putting Google in a position where it has no choice but to set up locally in order to remain at the cutting edge.
Like many Western services including Twitter and Facebook, users in China are prevented from using Google due to the country's strict internet censorship, instead relying on Chinese alternatives.
Google said the facility will be the first of its kind in Asia. The company is already hiring staff for the new center.
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This moves comes after significant pressure and scrutiny from the United States of America and Europe for its tax practices. The social network now funnels all of its non-U.S. revenue through its worldwide headquarters in Ireland.
China intends to develop a domestic artificial intelligence industry worth $150 billion in the next few years.
But Google claims the Chinese centre will allow it to tap into "talented Chinese engineers, researchers and technologists, as it said that "China is home to numerous world's top experts in artificial intelligence (AI) and machine learning". The next year, Google stood up to the authorities and stopped voluntarily censoring its search results in the country. Cloud computing will be the way that most companies access AI and machine learning in the future. The centre will be led by Fei-Fei Li, who runs Stanford University's Artificial Intelligence Lab and heads the AI arm of Google's Cloud business, and Jia Li, the head of research and development for the AI division of Google Cloud. The Google AI China Centre will also fund and sponsor AI conferences and workshops, collaborating with the Chinese AI research community.
Like Google, most major US information technology companies can not ignore the booming growth market that is China. Li Meng, the vice minister of science and technology, said China should be on par with other leading countries in A.I. technology in research by 2020, and by the end of the following decade, China should be the global "innovation center for A.I".