Opinion Artificial intelligence

China battles the US in the artificial intelligence arms race

What counts is implementation not innovation, and here the Chinese have big
advantages

MARTIN WOLF

Martin Wolf 2 HOURS AGO

In late March I attended the China Development Forum for the ninth time. The visit
stimulated my recent observations on China’s economy and politics. But what makes the
CDF most valuable is serendipity. This time that came in the shape of a meeting with Kai-
Fu Lee, former president of Google China and now a leading venture capitalist in Chinese
technology.

Mr Lee gave me a copy of his new book, AI Superpowers: China, Silicon Valley and the
New World Order. This has a startling story to tell: for the first time since the industrial
revolution, he argues, China will be at the forefront of a huge economic transformation —
the revolution in artificial intelligence.
He starts his book by talking about China’s “Sputnik moment”, when Google DeepMind’s
AlphaGo defeated Ke Jie, the world’s leading player of the ancient Chinese game of Go.
This demonstrated the capacity of modern AI. But, by implication, Mr Lee’s book foresees
another such moment, when the US realises it is no longer leader in the global application
of AI. The original Sputnik moment occurred when the Soviet Union put the first satellite
in orbit in 1957. This led to the space race of the 1960s, which the US duly won. What will
the present “race” lead to?

Mr Lee does not claim that China will lead in fundamental innovation in this area. But
that may not matter, since the big intellectual breakthroughs have already occurred. What
matters most is implementation, not innovation. Here China has, he writes, many
advantages.

First, the work of leading AI researchers is readily available online. The internet is, after
all, a superlative engine for spreading intellectual breakthroughs, not least including
those in AI.

Second, China’s hypercompetitive and entrepreneurial economy lives by Facebook

founder Mark Zuckerberg’s notorious motto: “move fast and break things”. Mr Lee
describes a world of cut-throat business activity and remorseless imitation, which has
already allowed Chinese businesses to defeat leading western rivals in their home market.
The ceaseless “trial and error” of the Chinese business model is, he argues, well suited to
rolling out the fruits of AI across the economy. It could, for example, work far better in
introducing autonomous vehicles than the west’s safety-conscious approach. China’s
swarms may be inefficient, but they are effective. That is what matters.

Third, China’s dense urban settlements have created a huge demand for delivery and
other services. “American start-ups like to stick to what they know: building clean digital
platforms that facilitate information exchanges,” Mr Lee argues. But Chinese firms get
their hands dirty in the real world. They integrate the online and offline worlds.

Fourth, China’s backwardness allowed businesses to leapfrog existing services. So China

has been able to jump to universal digital payment systems, while western businesses still
use outdated technology.

Fifth, China has scale. It has more internet users than the US and Europe combined. If
data is indeed the fuel of the AI revolution, China simply has more of it than anybody else.
Sixth, China has a supportive government. Mr Lee cites a speech by premier Li Keqiang in
2014 at the World Economic Forum’s “summer Davos”, calling for “mass
entrepreneurship and mass innovation”. In his report “Deciphering China’s AI Dream”,
Oxford university’s Jeffrey Ding points to the State Council’s national strategy for AI
development. China’s government has ambitious goals and is willing to take risks to
achieve them. One of the things China can do more easily than anywhere else is build
complementary infrastructure.

Finally, writes Mr Lee, the Chinese public is far more relaxed about privacy than
westerners. Chinese leaders, it may be argued, see no justification for individual privacy
at all (except for their own).

So where is this supposed “race” between the US and China today? Mr Lee distinguishes
four aspects of AI: “internet AI” — the AI that tracks what you do on the internet;
“business AI” — the AI that allows businesses to exploit their data better; “perception AI”
— the AI that sees the world around it; and “autonomous AI” — the AI that interacts with
us in the real world. At present, he thinks China is equal to the US in the first, vastly
behind in the second, a little ahead in the third, and, again, far behind in the fourth. But
five years from now, he thinks, China might be a little ahead in the first, less far behind in
the second, well ahead in the third and equal in the last. There are, to his mind, no other
competitors.

Mr Ding analyses the drivers differently. He distinguishes hardware, data, research and
the commercial ecosystem. China is far behind the US in production of semiconductors,
ahead in the number of potential users and has about half the number of AI experts and
roughly half the number of AI companies. All told, China’s potential is about half that of
the US. Yet Mr Ding is looking at AI overall, while Mr Lee focuses on commercial
applications.

Historical experience suggests that the rents created by a lead in an important technology
are valuable, though often impermanent. So, which country will be ahead in the
application of AI is indeed important. But the economic and social impact of AI is a bigger
issue and one that is relevant to every country

As Mr Lee stresses, advances in AI offer gains. This is not just in personal convenience,
but in improving medical diagnostics, tailoring education to individual students,
managing energy and transport systems, making courts fairer, and so on and so forth.
Yet AI also threatens huge upheavals, notably in labour markets. Many of the jobs (or
tasks) that AI might do are today done by relatively educated people. It seems reasonable
to fear that AI will accelerate the hollowing out of the middle of the earnings distribution,
possibly even the upper middle, while increasing concentrations of private wealth and
power at the top.

Yet perhaps the most important consequence will be in the intensity of influence and
surveillance made possible by AI-monitored mobile devices and sensors. George Orwell’s
Big Brother (or many big commercial brothers) might watch us all the time. Such perfect
monitoring might be attractive to China’s state. It is horrible to me and, I hope, billions of
others.

AI, Mr Lee insists, is not the same as artificial general intelligence: the true super brain is
far away. Even so, the challenges this AI creates are huge. We will not stop it. But we may
in the end conclude we have birthed a monster.

martin.wolf@ft.com

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