Blog. The Chinese Government’s role in China’s tech revolution and application of AI is huge and clever – and according to Kai-Fu Lee, a Chinese-American investor, China will very soon catch up with and possibly surpass the US in artificial intelligence. His book ‘AI Superpowers’ is an interesting look into how the Chinese government operates.
“I believe that the skillful application of AI will be China’s greatest opportunity to catch up with – and possibly surpass – the United States.”
Such are the words from Kai-Fu Lee, a Chinese-American investor, who has in-debt knowledge of what fuels China. In 2009 Kai-Fu Lee left his job at Google China in order to establish his investment firm, Sinovation. The local Chinese government covered his rent for three years. Guo Hong, a middle-aged Chinese government official, helped built an ecosystem of money, real estate and government support helping Chinese founders like Kai-Fu Lee with their startups building Chinese products to solve Chinese problems.
This gave innovators the money and space they needed. And with that came a sea of change that led to an overnight boom in production of the national ressource of the AI age, data, according to Kai-Fu Lee.
For example the US Groupon company was based on a concept tailor-made for China and by the time of Groupon’s initial public offering in 2011, there were over 5000 group-buying companies in China.
China has the biggest number of internet users in the world (more than US and Europe combined), and they all produce data every day, every minute, every second. China has never adopted credit cards, but went directly from cash to mobile payment, and data from mobile payment is generating the richest maps of consumer activity the world has ever known. China is also mobile first, as many Chinese simply never got a computer, but went directly from analogue to mobile.
But China’s data advantage extends from quantity into quality, according to Kai-Fu Lee. They also gather huge amounts of data from what they do in the real world. From schools, smart cities, shops and everywhere imaginable by means of sensors and facial recognition.
With data in both huge quantity and quality the Chinese advantage is immense. But it is the government support that really pushes it forward.
When The Government Gives Stamp of Approval
Before a new industry or activity has received the stamp of approval from Chinese authority figures, it’s viewed as inherently risky. But if that industry or activity received a ringing endorsement from Chinese leadership, people will rush to get a piece of the action, says Kai-Fu Lee in his book.
It really kicked off in 2014 when the government started pushing official policies for tech entrepreneurship. Under the banner of mass innovation and mass entrepreneurship China’s central government laid the goals. And in China, when the central government sets a clear goal, ambitious officials everywhere in the huge country throw themselves into advancing that goal and proving themselves capable. Promotion for local officials in China’s government bureaucracy is based on performance evaluations conducted by higher-ups with in the Communist Party’s internal human ressource department. Therefore, 1000s of mayors suddenly flooded their cities with new innovation zones, incubator and gov back VC funds.
That is why we see a growing number of Chinese companies not only ruling in China but also taking on the world and posing a competitive threat to the US with e.g. BAT consisting of Baidu, Alibaba and Tencent opposed to the US GAFA, Google Amazon, Facebook and Apple.
But where the US according to the author takes the light approach, China take the heavy. Not so much in the case of WeChat, who practially encompasses the functionality of Facebook, iMessage, Uber, Expedia, eVite, Instragram, Skype, Payopal, Grubhub, Amazon, LimeBike, WebMD and many more.
But more because the Chinese not just build the platform – they recruit each seller, handle the goods, run the delivery team, supply the scooters, repair the scooters and control the payment, writes Kai-Fu Lee and points to Didi, who pushed Uber out of China and has begun buying up gas stations and auto repair shops to service it fleet. And Tujia (China’s Airbnb) not only manages a large chunk of rental properties itself but also provide other hosts with services such as cleaning, stocking with supplies and smart locks.
Note from author: Let’s hope that the Chinese way of doing AI, where privacy, ethics and humans are not at the center, but tech and endless growth are, will never be adopted in Europe. China is a data dictatorship with it social credit system that controls its population as opposed to the US data monopoly, where a few big tech corporations sit on most personal data. Neither way is democratic or human centered. Read more about the European data democracy.