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Currently, the US appears to be leading the AI race, and there are indications that existing restrictions on semiconductor exports to China could impede Beijing’s technological progress. However, analysts believe that China has the potential to catch up, considering that the development of AI solutions takes several years. Kendra Schaefer, head of tech policy research at Trivium China, suggests that Chinese internet companies may be more advanced than their US counterparts, depending on the measurement criteria. Nevertheless, China’s ability to manufacture high-end equipment and components lags behind global leaders by an estimated 10 to 15 years.
Silicon Valley plays a crucial role in the US’s AI advantage. It has fostered a unique research culture that has contributed to the birth of technology giants such as Google, Apple, and Intel. Pascale Fung, director of the Center for Artificial Intelligence Research at the Hong Kong University of Science and Technology, explains that researchers in the US often spend years improving a technology without a specific product in mind. In contrast, Chinese companies typically develop deep learning systems or large language models only after witnessing their popularity, posing a fundamental challenge for Chinese AI development.
Additionally, US investors have shown strong support for research efforts. For instance, Microsoft pledged $1 billion to OpenAI in 2019, emphasizing the transformative potential of AI in addressing global challenges.
On the other hand, China benefits from its vast consumer base as the world’s second-most populous country, with approximately 1.4 billion people. It also has a thriving internet sector, exemplified by the widespread use of the super app WeChat, which serves various purposes from messaging to appointment booking and tax filing. This abundance of data enhances the potential for product improvement. China’s less stringent privacy rules and extensive data availability, including widespread CCTV facial recognition, offer valuable resources for AI-generated advancements.
While China’s tech community may seem to lag behind the US, it possesses an advantage in terms of developer mindset. Lee Kai-Fu, a prominent figure in Beijing’s internet sector and former head of Google China, argues in his book “AI Superpowers: China, Silicon Valley, and the New World Order” that Chinese developers thrive in a competitive environment where speed and copying are essential for market success. This contrasts with Silicon Valley, where copying is stigmatized, and companies often rely on one original idea or stroke of luck.
China has been transitioning its economy from manufacturing to technology since the 1980s, witnessing increased innovation from Chinese consumer-driven internet companies and high-end designs in the past decade.
However, the impact of Beijing’s authoritarianism on AI development remains uncertain. Questions arise regarding censorship and the ability of Chinese AI chatbots to address sensitive topics, such as queries about President Xi Jinping. Yet, Edith Yeung, a partner at Race Capital investment firm, suggests that controversial questions are unlikely to be asked on platforms like Baidu or Ernie due to censorship awareness. While sensitive topics garner media attention, they represent a small portion of chatbot usage.
The main concern lies in US attempts to restrict China’s access to specialized technology, potentially hindering China’s AI industry. High-performing computer chips, or semiconductors, are at the center of tensions between Washington and Beijing due to their widespread use in everyday products and their significance for AI hardware. Currently, US companies like Nvidia lead in AI chip development, making it challenging for Chinese competitors to keep up given export restrictions. However, this primarily affects China’s high-tech industries rather than consumer technology production, as export controls focus on preventing advanced AI development for military purposes.
To overcome these challenges, China needs to cultivate its own version of Silicon Valley, fostering a research culture that attracts diverse talent. Thus far, China has relied on both domestic talent and individuals with Chinese heritage from overseas. However, Pascale Fung emphasizes the limitations of homogeneous cultural thinking.
China has taken steps to bridge the gap, such as the establishment of the “Big Fund,” which offers significant incentives to chip companies. Nevertheless, Beijing has also tightened its control over the sector, and recent corruption accusations against technology tycoon Zhao Weiguo indicate the potential risks and uncertainties associated with government focus on specific industries.
The future of China’s AI industry will depend on how these factors unfold and interact with each other.
