Why China will win the global race for complete AI dominance

A State Council document resolved to position China as the world’s pre-eminent practitioner of AI within the next 12 years. Governments across the world are rushing to support innovation in AI, but none has published as coherent a plan as China and, more importantly, has the ability to get things done
The Chinese government can implement policy in ways that are impossible in western democracies.
Intent, however, is one thing: to paraphrase the boxer Mike Tyson, everyone has a plan until they get punched in the mouth. The Chinese not only have a strategy, they have a track record of delivering on large-scale, ambitious projects. Its One Belt, One Road infrastructure project is reshaping large chunks of the world and its policy for ‘mass entrepreneurship and innovation’ has set aside $320 billion to support entrepreneurs in order to drive a structural shift from an industrial to service-based economy underpinned technology and innovation.
“The State Council paper laid out China’s desire to be a hub of AI innovation by 2030, and these papers have teeth in terms of very strong local execution,” says Kai-Fu Lee, a key figure in the Chinese technology industry. With a portfolio of 300 companies, Lee is among the leading investors in Chinese AI startups through his venture fund Sinovation Ventures, a $1.8bn dual currency fund, which also invests in the US.
“All the ministries are thinking about it – from the ministry of science and technology to the ministry of education,” Lee says, detailing an array of subsidies, tax rebates, guiding funds and incentives offered by local governments which, in China, typically have a significant role in investment alongside private investors.
“State Council papers have the tradition of rapidly mobilising the whole country as a call to action and we’ve seen that in the speed in which China has built its high-speed rail, and when its mass entrepreneurship and innovation campaign [launched in 2014] caused 66,000 incubators to be built over two years.”
Lee, 56, is ideally placed to offer a perspective on the Chinese technology sector, as he occupies the unusual position of being both an outsider yet is, demonstrably, also an insider. Born in Taiwan to Chinese parents who emigrated to the US, he attended high school before completing a PhD in computer science at Carnegie Mellon. In 1990, he was appointed chief research scientist at Apple, where he worked in both product and management, before moving to Microsoft in 1998, where he served in a number of senior roles, including instituting Microsoft Research in Beijing.
In 2005, he was appointed president of Google China. After four years at the search giant he announced he was leaving to run, Sinovation Ventures, which specialises in early stage and seed funding. Today, with investments in verticals from retail to transportation, fintech to robotics, he’s something of a rock star in the Chinese tech scene, with more than 50 million followers on social networks within the country.
With entrepreneurial culture having developed at breakneck pace in China over the past decade – today, the value of some Chinese technology companies like Alibaba and Tencent surpasses that of their American counterparts – Lee’s belief is that China enjoys significant structural advantages, primarily that of scale.
“AI is run on data as fuel and China has so much more data than any other country,” Lee says. “While the mobile user numbers are maybe three X difference, the mobile payment numbers are more like 50 times more than the US. This huge amount of data can be cranked through the AI engine for better predictions, better efficiency, higher profits, less labour, less cost and so on. The data advantage is a huge one.”
As debate continues in western democracies about the power and influence of technology companies and the way they share and use consumer data, there are few such qualms among Chinese consumers – and certainly none among technology companies, all of which operate with the implicit approval of the government. Earlier this month, Beijing startup SenseTime, which makes surveillance technology, received $600m in funding, giving it a valuation of $4.5bn.
“Chinese users are willing to trade their personal privacy data for convenience or safety,” Lee says. “It’s not an explicit process, but it’s a cultural element.”
But, state policy and a vast marketplace will only take innovation so far. In order for machine learning and other forms of computer science to provide the tools needed for the dominant startups of the future, there is a need for talent in what has become a global marketplace.
“There are a huge number of engineering students who are ready to go into AI,” Lee says. “A lot of people misunderstand AI as a brilliant scientist invents another AI algorithm for medicine, finance, loans, banking, autonomous vehicle, face recognition… But that is just not the way AI business is run. There is really one fundamental AI innovation – deep learning – and everybody else is tweaking it for the domains.
“So, we’re not in the age of discovery; we’re in the age of implementation, we’re in the age of data, and China has a better set, a larger set of implementers or good AI engineers who get the work done, who make the algorithms run fast, connect to business logic.”