China and the US remain on a collision course over global leadership in hi-tech innovation

3 Jan, 2019 09:49
source: 香港奇点财经Singularity Financial

In November 2018, the US Commerce Department released a list of technologies, including artificial intelligence, that are under consideration for new export rules because of their importance to national security.

The export controls are being considered as the United States and China engage in a trade war. The Trump administration has been critical of the way China negotiates deals with American companies, often requiring the transfer of technology to Chinese partners as the cost of doing business in the country. And federal officials are making an aggressive argument that China has stolen American technology through hacking and industrial espionage.

AI gets political

An article released by New York Times on January 1, 2019, pointed out that, curbing on A.I. exports may eventually have Silicon Valley lose its edge. It is difficult to put a “made in America” label on artificial intelligence. Research on the technology is often done collaboratively by scientists and engineers all over the world.

Artificial intelligence, which involves computer systems performing tasks that simulate human intelligence, is expected to turn into a high-stakes political issue for China, as unresolved trade tensions prompt the US to tighten controls over the export of chips and other key technologies to the mainland.

Jeffrey Ding, China lead for the Governance of AI Programme at University of Oxford, said the export controls may push Beijing to “ramp up efforts at promoting indigenous innovation, which may come back to bite American firms hoping to maintain access to the Chinese market”.

China has identified 17 key areas for AI development in China, among them smart vehicles, intelligent service robots, intelligent drones, neural network chips, and intelligent manufacturing, for examples; as well as bringing the value of AI to all levels throughout the supply chain.

In the near-term future, China’s Ministry of Industry and Information Technology (MIIT) hopes to thrive in smart chips for autonomous driving, intelligent vehicle algorithms, and vehicle communications. Over the coming three years, Beijing expects to increase in the size of the AI industry by ten times.

China has a competitive AI game plan

The Boston Consulting Group’s study Mind the (AI) Gap: Leadership Makes the Difference published earlier December 2018 provides insights into China’s emerging global leadership of AI. A copy of the study can be downloaded here. BCG’s study focuses on the key drivers of success in AI implementations and is based on a global survey of over 2,700 managers in seven countries.

The study found that there is a strong connection between bold, disruption-friendly management styles including actively putting AI high on the agenda, encouraging rapid development and piloting, and fostering cross-functional, agile R&D, all leading to AI industry leadership. Chinese organizations are beginning to dominate AI due to these factors combined with their shorter innovation cycles than their peer organizations. BCG found that structural improvements at the national level do play an important role in laying the foundations for AI growth—investments in data infrastructure, in research hubs and networks, and higher education for IT and data-related fields.

In fact, global GDP is set to increase by 14 percent because of AI, according to PwC. The tech’s deployment in the decade ahead will add $15.7 trillion to global GDP, with China predicted to take $7 trillion and North America $3.7 trillion, according to the multinational company. “Data is the new oil, so China is the new Saudi Arabia,” Kai-Fu Lee, venture capitalist and author of “AI Superpowers: China, Silicon Valley, and the New World Order,” told CNBC’s “Squawk Box.”

“If you measure by research — basic research papers published, excellence of research — U.S. is and will be ahead for the next decade,” he said. “But if you measure by value created, how much market capitalization, how many users, how much revenue, China probably is already ahead.” Lee said AI could replace 40 to 50 percent of all jobs in the U.S. in the next 15 years.

The steps to achieve global dominance reflect the amount of funding destined to technology and AI firms in China. Last year, 48 percent of total global funding of AI startups globally came from China, compared to 38 percent funded by the US, and 13 per cent by the rest of the world.

China will soon overtake the US in developing and deploying AI

Lee Kai-fu, Google’s former China head who now manages about US$2 billion in investments as chairman and chief executive of the technology-focused venture capital firm Sinovation Ventures, acknowledges that China is playing catch-up to the US but thinks the balance is tilting due to the country’s practical application of AI and huge pools of data.

“I believe that China will soon match or even overtake the US in developing and deploying AI,” he writes in his new book, AI Superpowers: China, Silicon Valley and the New World Order ,arguing that China’s entrepreneurs are using AI to solve real-world problems just like entrepreneurs in the 19th century applied the invention of electricity to practical concerns such as cooking, lighting and the powering of industrial equipment.

According to Lee, this transition towards implementation helps China avoid its weak point in “outside the box” approaches to research and a lack of top-tier researchers, and leverage its most significant strength – “scrappy entrepreneurs with sharp instincts” for building robust businesses.

According to China AI Development 2018 report, China had 18,232 AI technology research talents, accounting for 8.9 percent of the world’s total, US accounting for 13.9 percent. Currently, China is harnessing the potential of digital technologies to continue its progress on the path of economic development.

Many Chinese businesses are recognizing the need to invest their money and expertise in innovation hubs or equivalents to drive leading-edge products and services. Susana Tsui, Group CEO of Dentsu Aegis Network, China, says, “These investments will help China to move further up the value chain into more knowledge-based activity, while also increasing the spread of digital services and products across the economy.”

“I think moving forward into the future, we are going to see more industry-specific or vertical-specific AI, and AI-specific chipsets dedicated for specific use cases. At the moment, the industry as a whole is working on creating powerful general purpose AI frameworks and hardware. Once all the groundwork has been laid out, we will see more targeted AI applications which will lead to industrial wide adoption,” Su says.