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China’s pursuit for world domination in AI (artificial intelligence) technology began in 2017, when the country revealed an audacious plan to leapfrog the United States and become a global leader in the field by 2030. The chest-thumping move was Beijing’s clearest signal yet to the world, that it intends to win the race to the top.
Despite ramped up investments by the government to aggressively push AI development in recent years, cracks are starting to emerge which may hamper its attempts to translate the bold vision into reality.
While the vision is broad, it is ironically quite narrow as China’s focus is more economic in nature — being the market leader in AI research and technology, ” notes Reuben Ng, Assistant Professor at the Lee Kuan Yew School of Public Policy, and Lead Scientist at the Llyod’s Register Foundation’s Institute for the Public Understanding of Risk. “A broader vision will include AI governance, change management, and implementation.”
China and the US are currently the world leaders in AI development. In 2015 alone, they accounted for nearly 10,000 papers on AI published in academic journals. While Chinese academics have actually published more papers on AI than US researchers, their papers have not generated the same impact as those by US or UK authors, noted McKinsey.
This was borne out in a recent industry report by Lux research on China’s AI capabilities, which stated: “Despite publishing a significant percentage of research papers in AI globally, Chinese researchers occupy less than 8% of the spots for top-cited researchers. In other words, China is still far from becoming the leader when it comes to pursuing novel and influential research in AI.”
There is also greater uncertainty about whether China will be able to achieve pioneering breakthroughs in AI in the next decade, because the country still has not produced fundamental innovations.
Caught in a bubble
Ironically in the race to the top, China may be a victim of its own hubris as the hype overtakes reality. This is a reflection of the wider problem encapsulating the AI industry, which is witnessing its own moment of reckoning.
Due to a slowing domestic economy and a trade war with the US, the Chinese market is now experiencing a scenario that legendary investor Warren Buffett once observed as: “It’s only when the tide goes out that you learn who has been swimming naked.” It may be that China’s tech boom is beginning to blush.
Investors have started to turn squeamish on China’s start-ups amid growing concerns over their inflated valuations. Venture capital deals plummeted 77% to US$9.4bn in the second quarter of 2019 compared to last year, while the number of deals roughly halved to 692, according to data firm Preqin. Specifically, investments in AI plunged 63% year-on-year in terms of value, with the sector closing 30 financing deals compared with 55 in 2018.
While Chinese AI start-ups received US$6.1bn in venture capital funding over the past four years — almost 70% higher than those in the US, a lack of diversity in AI development and applications make it challenging for Chinese tech companies to successfully capture the US and European market, noted the Lux research.
“On the surface, all innovation-related data indicate that China is poised to take over the world. Diving deeper, we find that all the hype around AI in China is warranted; however, it only highlights a few platform technologies and market segments," stated Jerrold Wang, analyst and lead author of the report.
A test of two systems
Even China’s holy trinity — Baidu , Alibaba and Tencent — often touted as symbols of national pride, have not been spared.
For instance, Beijing-based Baidu — an early trailblazer in AI — has seen its share price slide 40% this year and posted its first loss since listing in 2005. Most of the AI scientists that Baidu recruited departed last year, and it lost its star academic — Andrew Ng, a Stanford university professor who had joined the firm in 2014.
Despite the tech giants current troubles, Dr Ng remains bullish on their growth prospects. “We need to take a long-term view of these companies. Since they started, their growth has been tremendous. Besides, investments in research and development take time to bear fruit. So I think the prospects are very good.”
While China’s AI momentum may have stalled it hasn’t derailed its vision. Only time will tell whether Beijing achieves its goal to replace the US as the global leader in AI, in the next decade. Industry observers, however, are more circumspect.
In his 2018 book, AI superpowers: China, Silicon Valley, and the New World Order, Chinese venture capitalist and AI pioneer Lee Kai-fu, observed China and US are set for an arms race in AI that will lead to a duopolistic future, where both systems will be tested.
“The world seems to be heading towards a bifurcation of technology systems,” concurs Dr Ng, adding both nations are competing against each other in the global AI race, instead of cooperating, which may not lead to a desirable outcome in the end. “I don't think the benefits outweigh the cost. Instead, the costs overwhelm the benefits.”