Chapter 5: Case Studies
5.3 Artificial Intelligence (AI)
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to domestic innovation will continually hamper progress in robotics. In this regard, subsidization, weak IPR rights, government interference may lead to a focus on “quantity over quality.”225 Given the existing technology gap between domestic and international producers, particularly in areas like robotic
programming and higher end “smart” robots, it’s unlikely China will wall off its domestic market from MNCs. Similar to the IC sector, China will continually rely on overseas M&A and foreign partnerships as a means of overcoming structural constraints on domestic innovation in the robotics sector.
5.3 Artificial Intelligence (AI)
The potential ramifications for national AI development are significant and multi-faceted; AI is widely seen as one of the most transformative areas for technical progress of the 21st century. According to a report prepared for the Harvard Belfer Center, AI development holds the potential for fundamentally reshaping three critical areas: military superiority, informational superiority, and economic superiority.226 Put another way, AI holds the potential for fundamentally altering the existing international balance of military and economic power, as well as transforming how humans being communicate and access data.
Public interest in AI has spiked in recent years on account of “four key drivers” of rapid progress: significant improvements in computing performance; larger overall data sets conducive to machine learning; advances in overall machine learning techniques through the development of more sophisticated algorithms; and a substantial rise in private investment, particularly among leading technology companies.227 So far, most progress is occurring in the field of “narrow AI” with meaningful progress in “General AI” (AI more closely resembling a human brain) seen as still over a decade away. A report on the future of AI prepared for the White House in 2016 categorizes “Narrow AI” as AI “which addresses specific application areas such as
225 Zaleski, CNBC
226 Greg Allen and Taniel Chan. “Artificial Intelligence and National Security.” Harvard Belfer Center. July, 2017.
227 “Preparing for the Future of Artificial Intelligence.” Executive Office of the President National Science and Technology Council.
<https://obamawhitehouse.archives.gov/sites/default/files/whitehouse_files/microsites/ostp/NSTC/preparing_for_the_future_of_ai.
pdf>
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playing strategic games, language translation, self-driving vehicles, and image recognition.”228 At this juncture the ramifications of AI are still poorly understood although it’s widely assumed the long term application potential is virtually limitless with massive ramifications for human life.
In recent years, China has emerged as a world leader in AI research and investment. Today, it’s “AI
ecosystem” is the second largest in the world behind only that of the USA. China ranks second in terms of AI funding, number of companies operating in AI, and in number of patents. China also recently overtook the US in the number of AI-related academic papers. According to a recent report from the McKinsey Global Institute, “China and the Unites States are currently the world leaders in AI development.”229
China benefits from several underlying characteristics seen as conducive to progress is AI development: vast amounts of available online data integral for machine learning; weak privacy laws; a robust digital
ecosystem; and an array of powerful private sector tech giants investing heavily in AI development. Baidu, Alibaba, and Tencent (“BAT”) are seen as leaders in the field of AI research. Chinese internet search
companies – by virtue of access to vast quantities of consumer data – are particularly well positioned to take advantage of the AI trend.230
Harnessing the development of AI is widely seen within China as central to enhancing overall economic productivity and alleviating the concerns of an aging population. There is also hope that – by gathering and analyzing vast quantities of data – China will be able to prove more effective in resolving social problems through improved quality of governance.
Policy Tools and Goals:
228 Ibid
229 Dominic Barton, Jonathan Woetzel, Jeongmin Seong, and Qinzheng Tian. “Artificial Intelligence: Implications for China.”
McKinsey Global Institute. April, 2017.
230 “China may match or beat America in AI.” The Economist. July, 2017.
<https://www.economist.com/news/business/21725018-its-deep-pool-data-may-let-it-lead-artificial-intelligence-china-may-match-or-beat-america>
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The imperative placed on taking a leading position in the development of AI comes across clearly in the recently released State Council Notice on “Next Generation Artificial Intelligence Development Plan”:
At present, China’s situation in national security and international competition is more complex, and [China] must, looking at the world, take the development of AI to the national strategic level with systemic layout, take the initiative in planning, firmly seize the strategic initiative in the new stage of international competition in AI development, to create new competitive advantage, opening up the development of new space, and effectively protecting national security.231
Chinese state planners see AI as an integral future technology; one essential to military modernization and national security but also critical for the civilian imperative of building a prosperous society through harnessing the movement toward “informatization” and intelligent manufacturing. The State Council plan stresses that, over the next decade, AI represents “the main driving force for China’s industrial upgrading and economic transformation.”232 The future of national competitiveness – in both the security and commercial arenas – is seen as highly contingent on AI.
To that end, the State Council report sets an ambitious set of objectives: calling for Chinese AI to be “in step with globally advanced levels” by the year 2020.233 The aspiration is to create a 150 billion USD AI
industry by the year 2020. According to the Wilson Center, while precise figures on state support for AI research are hard to come by, several important funding schemes, mostly overseen by powerful S&T bureaucracies like MOST, MIIT and the MOF are in place to support development.
Furthermore, as analyst Elsa Kania points out, development in China seeks to leverage partnerships between the PLA and the private sector; drawing on an overall national strategy geared toward a tighter knit dual-use or civil-military fusion approach. This will, according to her, “involve the establishment and normalizing of
231 China State Council, Next Generation Artificial Intelligence Development Plan, Translation by China Copyright & Media
<https://chinacopyrightandmedia.wordpress.com/2017/07/20/a-next-generation-artificial-intelligence-development-plan/>
232 Ibid
233 Ibid
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mechanisms for communication and coordination among scientific research institutes, universities, enterprises, and military industry.”234
Future Outlook:
In comparison to other leading technology areas, the government approach in AI development is less top-down: SOEs are not major players in AI development, the central government emphasizes collaboration and support for private sector AI players and sustains funding for research through support for the university and S&T bureaucracies. Private sector players are proactively hunting for top-level AI talent and investing heavily in R&D. As an example, Baidu created a 200 million venture fund in September, 2016.235
Several concerns emerge regarding the future of AI development in China. In comparison to the United States, there is a less developed ecosystem for technology startups. Secondly, according to the MGI report,
“China is lagging behind the United States in creating a data-friendly ecosystem with unified standards and cross-platform sharing.”236 Access to government data sets for private sector entrepreneurs is also
comparatively limited.
Further, despite leading the world in quantity of overall AI-related research papers, the best AI talent is still predominantly located in North America. Meeting the talent shortage in the field will be an ongoing
challenge. As China moves in an increasingly authoritarian direction, the environment for
attracting/developing AI talent may not be on par with the West. Finally, a core driver of AI development – computing power – hinges on China’s access to cutting-edge hardware technology.
Going forward, the outlook for AI in China is quite bullish with some concerns of the development and retention of research talent and the nature of the holistic data ecosystem.
234 Elsa Kania. “China’s Quest for an AI Revolution in Warfare.” The Strategy Bridge. 2017. < https://thestrategybridge.org/the-bridge/2017/6/8/-chinas-quest-for-an-ai-revolution-in-warfare>
235 Yujia He. “How China is preparing for an AI-powered Future.” Wilson Center.
236 “Artificial Intelligence: Implications for China.” McKinsey Global Institute.
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