China’s Quest for AI Supremacy

Only a handful of countries and companies have any real hope of winning the race for AI supremacy. China, Germany, Japan, Russia, South Korea, and the US are among the national contenders and primarily Chinese and American companies lead the pack of commercial contenders, including Alibaba, Baidu, Tencent, Amazon, Facebook, and Google. What distinguishes all of them is the resources they have already devoted and the achievements they have already made in the AI arena. They are poised to leap further and further ahead of those who are lagging behind or have not yet even entered the race.

While Germany, Japan, and South Korea are focused primarily on commercial applications, Russia excels in military applications, and the US maintains its general lead (for the time being) in the space, but only China and these leading Chinese companies have positioned themselves to sprint ahead of all the others in the coming decade. China is particularly well placed to assume the global AI lead because it has capital, people, and computing power in abundance, and is deploying all of them in a targeted manner at the same time in pursuit of AI supremacy. While most countries that are either in the race or intend to get in the race may spend tens or hundreds of millions of dollars in pursuit of AI supremacy, China plans to spend at least US$150 billion to achieve that goal. It intends to be the world’s leading AI power by 2030, but it would not be surprising if it took the lead well before then.

China has two other resources that make it a promised land for AI. The country already has approximately 40% of the world’s trained AI scientists and most large universities have launched AI programs, meaning that percentage will only increase. Also, China’s enormous population generates more data than any other nation, given its 750+ million daily Internet users. Almost all of them go online from smartphones, which generate far more valuable data than desktop computers, primarily because they contain sensors and are mobile. Moreover, unlike in the West, where citizens are preoccupied with civil liberty protections, the Chinese are not necessarily so concerned about privacy, which makes openly collecting data easier.

While the quantity of Chinese AI research has grown dramatically, researchers in the US remain responsible for a lot of the most fundamental groundbreaking work. However, the White House Office of Science and Technology Policy, which was instrumental in leading AI policy work during the Obama administration, has been depleted of 70% of its staff under the Trump administration, depriving the US government of critical expertise and insights on AI at a time when China is planning its own AI revolution.

What Chinese researchers have been very good at doing is focusing on an idea and expanding on its different applications. In fact, the Chinese have become prominent in adding value to existing research, with researchers in China wasting no time to produce papers on various applications, which can then be further developed. Chinese researchers usually speak English, so they have the benefit of access to all the work disseminated in English. By contrast, the English-speaking AI research community is much less likely to have access to work written in Chinese, and the velocity of work is much faster in China than in most of Silicon Valley.

China’s government is proceeding at warp speed to rapidly make up for any lag it has with Western firms and governments. Chinese companies believe that by rotating Chinese staff to Silicon Valley and American staff to Chinese campuses, they can accelerate the timeline for reaching parity with the US. For the time being, however, the size and experience of China’s AI workforce is a fraction of that of the US. Half of the top 10 employers of AI talent in China are US firms - including IBM, Intel, and Microsoft - which are integral to the development of China’s human capital in AI.

For some types of high-value semiconductors China has had to rely on imports for virtually all of its needs. To address this the Chinese government implemented its “Made in China 2025” policy, an initiative to comprehensively upgrade Chinese industry and become the global leader in manufacturing, while at the same time achieving self-sufficiency and reducing reliance on other countries. The policy outlines a wide-ranging strategy for harnessing and promoting the acquisition of foreign technology through outbound investment, including the use of industrial funds, state-owned capital dividends, and other channels to support the creation of advantageous manufacturing capacity to implement overseas investment acquisitions and counteract China’s comparative manufacturing disadvantages.

That said, many countries have become concerned that Made in China 2025 is not simply an effort by a country that lags behind in some areas to become more competitive. Governments around the world are increasingly concerned that such investments by Beijing inside and outside of China are not simply a product of market forces, but are directed guided by the Chinese Communist Party rather than the private sector, particularly where high-tech is concerned.

There is now a growing backlash among Western governments against permitting future sensitive technology-oriented investments in their countries by Chinese investors. Many in the West may find China’s way of doing business distasteful, but there are no real rules dictating how to achieve AI supremacy. Like it or not, China is well on its way to getting there. It will do the West no good to simply complain about how China gets to the AI finish line. Perhaps it should play the game in a similar fashion.

The stakes are rather high and, in the end, it will not matter so much how a country achieves AI supremacy, but that it does so. China deserves credit for recognizing early on the importance AI fluency implies for national competitiveness in the coming decades. Other countries should either find a way to maintain their position or get out of the way, because nothing will stop Beijing in its quest to achieve AI supremacy.

*Daniel Wagner is CEO of Country Risk Solutions. Keith Furst is Managing Director of Data Derivatives. They are the co-authors of the forthcoming book “AI Supremacy”, which will be published in September.

Editor's Note: A version of this article first appeared here in The Straits Times on August 9, 2018.