The United States and China in the AI Economy


Current State of AI in the World (世界AI的现状)#

Artificial Intelligence (AI) was founded on the premise that computational intelligence could match or surpass the intelligence of a human. Also called 人工智能 in simplified Chinese, this term describes machines that are capable doing complex and high-level jobs that only humans are currently capable of doing, having cognitive functions with the human mind like learning and function. Since its conception in 1956 as an academic discipline, AI has already been able to impact our lives in a massive way, revolutionizing many aspects of industry with tasks such as text, speech and image recognition, autonomous driving, content delivery networks music and art. The current generation of AI (known as narrow artificial intelligence) is only seen as a rudimentary form of AI, capable of doing specific tasks based on substantial amounts of data. The coming generations of artificial intelligence is expected to revolutionize every major industry adding anywhere between $15.7 trillion to $150 trillion to the world economy by 2030 based on different forecasts (Forbes, AI World Economy in 2030), which is more the current GWP. While the whole world collaborates to further knowledge and research in AI, United States and China specifically have been responsible for most of the drive and implementation of AI. The United States leads the world in AI research, China leads in the implementation of AI and together both countries seem to be widening their AI preeminence in the world. The technology companies that lead the world in AI also seem to be equally distributed among China and the United States. Google, Facebook, Amazon and Microsoft are the American tech giants whereas Baidu, Alibaba and Tencent are distinctively Chinese with heavy investments in research and development of AI technologies. Due to cultural, political and socioeconomic differences between the United States and China, Artificial Intelligence will evolve both the US and Chinese economies in different ways as both nations advance in the research and implementation of these technologies, ultimately leading to an era of competition and collaboration between the two nations and their economies.

China’s Data Advantage (中国的数据优势)#

China has a clear lead in AI in retrieval of data due to its government’s support towards AI innovation and data collection, which are substantial for the empowerment of AI research and development. No matter how qualified a company’s engineers and researchers are, good AI comes with the availability of data, which China has become the third largest producer of after the US and UK (Bhaskar Chakravorti, Ajay BhallaRavi, Shankar Chaturvedi; Which Countries are Leading the Data Economy). Thanks to China’s 2017 New Generation Artificial Intelligence Development Plan, AI has become a topic of national pride in China and is widely talked about in the media, politics and various industry sectors. The government has heavily invested in the development and the implementation of artificial intelligence and pivoted towards a data economy. The government has taken actions to subsidize its technology companies and internet access for its public (Wong). Data has become the cornerstone that many influential Chinese tech companies like Pinduoduo, Taobao, MeiTuan and Duoyin base their business models from. For example, Alibaba owns the world’s largest ecommerce platform Taobao which maximizes its sales based on what people view. Based on pervious viewership, Taobao uses recommendation systems to determine what the user would be most likely to buy. Duoyin and Pinduoduo have similar business models where they take user data to predict what the users are most likely going to buy or watch, maximizing time spent on the app. This way Duoyin has become the fastest growing social media platform for the past year growing by almost 25% since last year. Duoyin’s International version Tiktok has been the fastest growing social network across many western and Asian markets such as the US, Europe, and India (Debra Aho Williamson and Man-Chung Cheung, What’s behind the Sudden Growth of Tiktok). Regardless of the government’s push towards the digitization of the economy, Chinese people have been very open and fast to adapting to new technologies. The Chinese youth have specially driven the technological revolution in recent years. Chinese payment platforms WeChat and Alipay altogether have seen even more transactions than that of the total Chinese economy. The differences between technology usage lie in the collection of data and Chinese perspectives towards it. While Americans are more skeptical and resistant towards adapting many technologies, the Chinese have been quick to embrace these technologies. As more people use digital systems to book cars, order food, watch media and pay for things, Chinese internet companies have had more data to work with to build better and more efficient artificial intelligence systems. This will become a self-perpetuating cycle that will lead China to build better, more efficient AI technologies.

The United States’ Research Advantage (美国研究优势)#

People in the United States and the West collectively are generally more skeptical of new technologies and averse to change, however the US’s technology environment have led to it leading world research in AI as well as more robust thought and philosophies regarding the ethics of AI. Technologies utilizing AI have permeated into the US technology landscape however not to the extent of China. American social media platforms like Instagram, Facebook, Twitter and YouTube have successfully utilized narrow AI technologies for their recommendation systems however machine learning and data-oriented planning has seen a lot of skepticism from the government. The US is much more skeptical of the power that AI brings as the major technology companies have had to testify in court about the power and influence they have recently gained over society. Even though technologies like Google’s Waymo self-driving cars are leading in the world in terms of autonomous driving, these technologies have not been deployed to the wider public as they have not been tested to perfection (Timothy B. Lee).

American technology companies are much warier of releasing imperfect technologies to the public as they know that the stakes are much higher and the US government will look at them with more scrutiny as their technologies release out in the world if it fails. This however does create more reliable and stable technologies that can be deployed out into the world. American companies generally put more work into innovation and have a lot of thought poured into their technologies. Issues like privacy of their users, and ethics involving edge cases are researched by people all across the society before a product is released. The United States is also home to the world’s more international and best universities and R&D. American universities have sourced talent from all over the world, having more liberal immigration policies compared to China, AI researchers flock to the US from the entire world including a large number from China. US companies having the financial edge are able to give high salaries to workers as US salaries for AI research and software development are some of the highest paying jobs in the world in 2019.

Historical and Cultural Perspective towards Entrepreneurship (创业的历史文化视角)#

The technology and research landscapes in the US and China also differ; while US technology research is driven by the idea of abundance, Chinese entrepreneurship is driven by the idea of scarcity. The decades after the second world war and cold war were drastically different periods for China and the United States. While the US saw a global domination of the economy making almost half of the world economy, China saw massive famine and lack of economic development during the “Great Leap Forward” and the post-Mao era. While one generation lived in abundance having high financial stability, another lived in scarcity, having food and other resources rationed to them. The technology innovation hub of the US, San Francisco, was already a wealthy elite city. San Francisco entrepreneurs were sons and daughters of wealthy engineers, doctors and lawyers who already were already upper middle or upper classes. Their entrepreneurship came from an intrinsic desire to make something new in the world, and solve a problem that was that would contribute to the world. In Silicon Valley, intellectual property and patents were taken very seriously and copying another company’s work was generally viewed in a negative way. The laws regarding monopolies and what a company could or could not do were also very intentional and explicit. Hence, there were rivalries and competition between the companies, however there was no sabotage of another companies. Competition happened in a sparing gentlemanly manner and employees generally did not go above the law to defeat their competition.

The Chinese entrepreneurship environment in 1990s until the late 2010s were in comparison, a frenzy. Company officials often broke rules and fled to other countries to avoid government prosecution. Software sold would often block a competitor’s software from running or in the example of 360 antivirus, would alert the user that any Tencent application on their computer was a security threat. In the mid 2000s a culture of 996 started emerging among the Chinese tech companies where employees would work from 9am to 9pm 6 days a week. When the stakes were so high and when the competition was ready to go far beyond what was allowed by the law, the only option for a company would be to participate in this intense warlike competition.

In the environment of survival, the goal of Chinese entrepreneurs, unlike those of their US counterparts was not innovation. It was getting rich. China’s current economic boom is a direct result of the government’s embrace of state capitalism. Mao Era China had seen an impoverished society in the verge of famine. There was a mentality that resources were scarce and wealth brought happiness and prosperity to a family. The current generation of Chinese entrepreneurs were raised in a time where there were lack of laws regarding intellectual property, meaning that any idea could be copied and replicated. This gave birth to companies like Meituan, Tencent, Alipay which are entire ecosystems instead of separate applications. These applications were made in the mentality that, under the pressure to survive they must invest in their infrastructure from top to bottom. A company like Meituan, which started out as a clone of GroupMe would initially begin with group buying and later build their own food delivery infrastructure with restaurant review and ordering apps like Dianping as well as invest in bike-sharing infrastructure like MoBike. After looking at restaurants, a user could book the restaurant, and book a car to go to the restaurant right from the app. It also allowed users to order at the restaurant before they were even present. The goal was that a user could do anything they wanted without leaving their app. If the user did leave their app, it would be unlikely that a competitor’s app would leave them any cut revenue. While Meituan is only an example, these highly efficient ecosystems emerged across various platform like Tencent’s WeChat (微信) or Alibaba’s Alipay (支付宝).

While US companies competed and sparred idolizing research, innovative spirit and bringing new ideas into the world, Chinese companies competed to survive, developing highly efficient app ecosystems within their apps. This trend has continued toward the development and deployment of artificial intelligence technologies. Companies like Google have been highly focused on research are far beyond any other company in researching AI, whereas Chinese companies like Taobao have built their platform top to bottom, working on optimizing every part of the customer interaction and being open to deploying less perfect AI technology to their users.

Competition and Collaboration (竞争与合作)#

As the world economy transitions towards a data oriented digital relationship and Artificial Intelligence become a significant part of the economy of the world, it is clear that the China-US relationship will change. With the socio-cultural and political influences of both countries, both the US and China will have unique positions in the AI powered industries. The United States, with its more cautious outlook towards AI applications will be the thought center for ethics and philosophical discussions will have a lead in AI research which will be adapted by governments all over the world. China with its data advantage will have an edge in the implementation of AI. China is already undergoing an automation of many industries and is bound to see much more in the future. With both countries as leaders in their respective niches in AI, we will most likely see a future where there is competition between the two nations. Along with the competition however, there should be collaboration or diplomacy between the two nations. An AI arms race between the US and China could be very detrimental and dangerous, however a relationship of collaboration and competition could be the direction to go for the US and China. While China’s implementation could be a way to prevent AI from a standstill in the US, American careful consideration could be a reason for China to think back and debate which AI technologies are ready to be deployed.

© Swopnil Shrestha 2020