China has the resources and ambitious top-down plans to potentially create an intelligent economy powered by artificial intelligence and machine learning over the next several years, according to a new report from Goldman Sachs.

A man holds an UBtech Alpha humanoid robot at the annual Huawei Global Mobile Broadband Forum in Chiba, Japan, on Thursday, Nov. 24, 2016.

In the report, titled "China's Rise in Artificial Intelligence," the investment bank said the world's second-largest economy has emerged as a major global contender in using AI to drive economic progress.

Goldman said the government and companies have identified AI and machine learning as the next big areas of innovation.

"We believe AI technology will become a priority on the government's agenda, and we expect further national/regional policy and funding support on AI to follow," the bank said.

AI is already widespread: From simple smartphone applications that can tell the weather to complex algorithms that are able to easily beat humans in board games.

Companies such as Google and Microsoft have poured vast amounts of money into research and development to expand the horizon of what AI can achieve. Machines are fed large quantities of data and taught specific tasks, allowing companies to create software that can learn and become smarter.

While the United States is generally considered to be leading the field, other countries are catching up. China, home of internet powerhouses such as Baidu, Alibaba and Tencent, is one of them.

In July, China's State Council issued guidelines on developing AI inside the country and set a goal of becoming a global innovation center for it by 2030. It expects the total output value of AI industries to surpass 1 trillion yuan ($147.80 billion).

The Council encouraged the creation of open-source computing platforms and training more AI professionals and scientists. The guidelines said the government will invest in qualified AI projects and encourage private capital investment.