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China Is Set on Becoming the World's Leader in AI

And it’s willing to invest billions in the effort

July 21, 2017

China is making a serious bid to become the world’s leader in artificial intelligence (AI), the technology widely expected to drive innovation in nearly every sector of the global economy. Experts in the field believe China is not far behind the US in AI research and development, and China’s government just took a step that might push it past its political rival.

Yesterday, China’s State Council, the government’s head administrative authority, released an AI development plan designed to make China the world leader in the technology by 2025.

The plan calls for investments totaling billions of dollars in a number of domestic AI initiatives, The New York Times reported. It also creates a blueprint for greater collaboration between research entities, private industry and the Chinese military on AI development.

Meanwhile, in the US, government-supported AI research has not been a priority under the administration of President Donald Trump, who proposed cutting the National Science Foundation’s funding on “intelligent systems” by 10%, to $175 million, in his budget proposal.

“China is leading in Asia-Pacific when it comes to AI research,” said Melanie Cook, head of strategy and business consultancy for Southeast Asia at SapientRazorfish. “In China, the private and public sectors are basically one, and they’re spending billions on AI.”

Data from Analysys International Enfodesk demonstrates just how huge the AI business in China is expected to get. The research firm estimates that revenues generated by AI-related businesses and technology will total RMB13.24 billion ($1.99 billion) this year and climb to RMB20.0 billion ($3.01 billion) in 2018.

Artificial Intelligence (AI) Revenues in China, 2014-2018 (billions of Chinese yuan renminbi and % change)

Growth in China’s AI sector has been aided by a few factors. First, the increased availability of cloud computing in China has put the raw processing power needed to support AI efforts into a wider group of hands, at a more affordable price. There’s also a surfeit of talented scientists and mathematicians predisposed to working on AI research in the country.

In addition, the sometimes arduous task of entering complex Chinese characters into a handset has provided a strong incentive for the development of AI-dependent voice recognition software on smartphones. And the sheer size of the market in China means AI companies that run services like chatbots have massive amounts of user data to work with.

Baidu, best known for its search engine business, is probably China’s largest tech company attempting to pivot its focus to AI in the face of tighter government regulation that’s eroding its search ad revenues. In January 2017, Baidu appointed former Microsoft executive Qi Lu, who oversaw Microsoft’s strategy for developing AI and bots, as group president and COO.

Baidu has spent heavily on its self-driving car efforts, launching an open source autonomous vehicle platform called “Project Apollo” in April that’s also supported by its AI technology.

In February, Baidu announced that it had acquired Beijing-based Raven Tech, an AI-focused startup that was working on a voice recognition assistant. Then, in May, the company released its first commercially available AI product, a robot called “Little Fish” that uses voice recognition software to aid parents in child care by teaching children songs and languages. The device runs Baidu’s proprietary AI operating system, DuerOS, under the hood.

But Baidu is far from alone in funding AI research in China. AI-focused startup SenseTime Group recently raised the single largest investment round for any company in the sector, at $410 million. The company already provides its services to some of China’s largest companies, including conglomerate Dalian Wanda Group and smartphone manufacturer Huawei.

The government’s new plan to support China’s AI sector means more companies like SenseTime Group will emerge, giving former AI leaders in the US and Western Europe a serious challenge in the years to come.

Rahul Chadha


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