It has often seemed (in many ways) that every time you pick an item up from a store — be it clothing, technology, or even toys — it is ‘made in China.’ China’s economic growth has outpaced every other nation on the planet for years and, according to the Conference Board, very soon it will surpass the United States for the highest GDP (Gross Domestic Product, or what a country produces).
Currently, it’s GDP sits at $14 trillion. It has enjoyed an average of 9.6 percent growth since 1989. In fact, over the past two years, China has accounted for almost 35 percent of global economic growth.
China’s government has ambitious plans when it comes to AI (artificial intelligence). ”With drones, AI and e-vehicles, China crafts green-tech megapolis”, titled one of the most recent articles from Thomson Reuters Foundation. ”Beijing wants A.I. to be made in China by 2030”, wrote the New York Times. The world has seen incredible advancements and technologies in AI, much of it coming from Chinese enterprises and innovations, many of which are coming out of its new $2.1 billion research park.
There are many potential applications for artificial intelligence and China will be leading the way. Eric Schmidt, the CEO of Google’s parent company Alphabet, who also happens to be the chairman of the Pentagon’s Defense Innovation Board, recently commented that the U.S. needs to “get our act together”. Whereas the United States had once been the technological leader in innovative development, by 2020 China will have caught up and within five years will have surpassed them. By 2030, the Chinese government anticipates dominating all aspects of the AI industry.
The Figures Behind the Claims
A recent study by PwC Global anticipates that artificial intelligence, once fully deployed, will add a whopping $15.7 trillion to the global economy, or GDP, by the year 2030. Of that, China is expected to account for nearly half, or $7 trillion dollars. The McKinsey Global Institute estimates that ”AI-powered applications will add $13 trillion in value to the global economy in the coming decade”.
Compared to what North America (Canada, Mexico and the U.S.) is expected to combine for $3.7 trillion in gains, it will be a staggering dominance if it comes to pass.
The Future of Business
Artificial Intelligence is arguably the future of business and that is made crystal clear when one analyzes what China and its entrepreneurs have managed to date. Chinese startup companies and businesses still turn to the U.S. model for strategic development, but they also rely on some innovative ideas that have helped the entire economy grow, especially as it pertains to technology.
There are literally millions of entrepreneurial endeavours taking place in China right now. Part of that is bolstered by more than 1.4 billion people who live in the country. Whereas in the U.S., innovative firms have a target market of 300 million in the country and have to deal with rules, laws, and regulations in other regions, including Canada and Europe, Chinese development firms need only turn to their willing and willful fellow citizens.
The vast majority of Chinese citizens are connected to the Internet and they are using AI technology wherever they can. In fact, while U.S. consumers are still relying on credit and debit cards as well as cash, almost everyone in China has switched to a cashless, mobile payment system. This provides a wealth of opportunity for Chinese entrepreneurs to gather information and breadth of people who are clamouring for the next, best, and greatest innovations.
The Four Waves of AI
As described by Kai-Fu Lee in his book, AI Superpowers: China, Silicone Valley, and the New World Order, the “Four Waves of AI” comprise Internet AI, Business AI, Perception AI, and Autonomous AI. Internet AI was the first wave, introduced in 1998. Business AI was the second, introduced in 2004. U.S. technological firms gave rise to these first two waves, but China has taken over and not only begun dominating the first two waves, but also the next to, which are Perception AI introduced in 2011 and Autonomous AI, introduced in 2015.
This provides China a decided competitive and marketing advantage that the U.S. has been slow to acknowledge and focus on.
A Significant Increase in Engineers
There are simply more engineers and entrepreneurs in China these days than the U.S. can even compete with. Demand for artificial intelligence engineers has gone through the roof in recent years.
Many Chinese companies and the government itself are actively seeking out creative minded, imaginative, and innovative thinkers who can think outside the box and develop tomorrow’s technology today.
In the past, innovation, especially within the technological sphere, was driven by a specific need, some kind of problem that needed to be solved. Today, at least in China, AI innovative technologies is being driven by a desire among the general public about what happens next.
In short, people are clamouring for the next waves, the next technologies, the next innovations and they want to be on the leading edge of what’s possible. People are excited about the changes in these technologies and, as a result, it is providing an opportunity for development firms and companies to capitalize on this enthusiasm.
Whereas some cultures, including Western culture, the general consensus is that citizens worry about how artificial intelligence could make certain jobs obsolete, in China, people are more focused on how they can make money off the next wave of advancements.
When there are tens of millions of people in one country all thinking like this, we can imagine how this is a driving force for what is moving China to become a powerful leader in AI technology.
A City of Growth
Shenzhen was once a small fishing village in China. In 1987 it’s GDP accounted for 0.1 percent of Hong Kong’s entire GDP. Now it is passing US$350 billion, outpacing Hong Kong itself.
That’s because the average age of a resident in Shenzhen is 28.65. They are young, technologically oriented, and innovatively focused. While a U.S. company comes up with a great idea, patents it, develops it, tests it, and then gradually begins to bring it to market, this is a slow trickle down the hierarchy. In Shenzhen, the entrepreneurial attitude exists in many of its residents and they are what drive innovative ideas. They are clamouring for the next great technology and that is inspiring engineers to create new concepts … and to do so fast.
Currently, the population of Shenzhen is 15 million. There are more than 3 million companies registered in Shenzhen. That gives just a small hint of how potent business success is for this Chinese city.
Capital Pouring In
When it comes to AI development, cash remains king. In order for technology firms and startup entrepreneurs and engineers to continue developing new ideas, it requires capital. In the first six months of 2018, Chinese start-ups raised more capital than their North American counterparts, a wapping $56 billion. Those Chinese startups accounted for almost half of all global venture capital funding.
It is that funding that helps to drive entrepreneurial innovation. Even the giants in AI throughout China are raising copious amounts of capital and merging and partnering with other companies to help develop these technologies.
There is great incentive provided through China’s government for these partnerships because of opportunities offered for new, effective technologies.
A Wealth of Information
Big Data is a major factor for many companies in Western markets. Many companies rely on big data to analyze consumers, buying trends, and other habits. This helps them refine marketing strategies and employ certain opportunities to capture the highest percentage of their target market.
Information is also critical to the development of artificial intelligence. Understanding how a person uses the Internet, shops online, orders a ride through a rideshare service, and even where they visit using data from their phone are all essential in helping to create more appealing designs and technological developments.
China simply has access to more information from its residents than other regions of the world. One of the key reasons for this is China’s love of mobile payment methods. Its citizens spend nearly 50 times more than American consumers using mobile payments.
They order food delivery 10 times more often than their American counterparts. Also, because of mobile payment and other data collection strategies, it produces nearly 300 times more information about where they go, what they do, what they enjoy, and so forth than any other country in the world.
The difference is one of off-line and online activity. Understanding a person’s online activity is certainly crucial to effectively targeting advertisements, sales, and marketing strategies, but that off-line activity is helping to improve smart city technologies.
The Development of Smart Cities
I’ve written about smart cities previously and as more major metropolitan regions in the world began embracing these smart technologies, AI will become a more integral part of these processes.
By reducing traffic, improving transportation options, taking advantage of renewable energy sources, improving communication, and much more, smart cities not only capitalize on AI, it also provides a rich resource of consumers and avid users of these technologies to help drive even more innovation.
China May Very Well Be the Most Supportive of AI
With its ambitious plan declared a couple of years ago to become the leader in AI innovation by 2030, it has already taken great strides in achieving that goal, in many areas, even far surpassing it.
There is a great incentive for companies to develop more effective and better AI innovations in China. Chinese officials have managed to lure in companies by promising these incentives, but the rewards don’t go to every entrepreneur, but rather those that are successful in creating the next wave, the next big idea, the next revolution in AI technology.
There are several AI development parks being established in major cities throughout China. These parks are laboratories where firms work together, in a partnership of sorts, to develop new ideas, capitalize on each other’s strengths, and determine the next wave of the artificial intelligence future.
The Old Way Is Fading
In the past, in China at least, they operated on a copycat model. This basically refers to local entrepreneurs that were utilizing ideas developed in the U.S. and other regions of the world and trying to emulate what they did. Now, their focus is on creating new concepts, tapping into markets that are clamouring for results.
Video games, smartphone apps, and other similar technologies are great testing grounds for these new AI developments. Even in markets that have been well-established for decades, China has become a leader and has no intention of letting that go.
The old models of technological innovation and development that have been successful for many Western companies and which have been responsible for some of the most incredible advancements of technological history may have worked, but China has discovered a new way forward and it is being driven by its eager consumer base.
China eagerly anticipates being the world leader in AI in just a few short years. With everything that it has developed, with the incentives the government has placed on entrepreneurial companies and even larger organizations, there is little reason to doubt they will achieve just that.
Where AI goes from here is certainly still a question, though many bright minds have a good idea, and much of the lead is going to come from a nation that has steadily grown its economy, global importance, and innovation.
Joseph is a senior advisor at the Senate of Canada. Joseph enjoys writing, blogging and teaching. You can follow Joseph via Twitter @josephsoares.