India & US Don’t Trust China And Can Challenge Its AI Momentum

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Drones have taken over the difficult and dangerous job of cleaning and painting the exteriors of high-rise buildings. Specialists finetune their diagnoses with the help of medical algorithms. Numerous driverless smart vehicles navigate themselves through busy intersections. Your refrigerator at home autonomously places an order for fresh milk, bread and vegetables as they run out.

Flight of imagination? Not at all. Technology for these applications has already been developed and is being rapidly commercialised. However, incredulously, these autonomous devices and applications are more likely to emerge from China (Shenzhen, Beijing and Shanghai) than the Silicon Valley in the US.

China – The ‘Factory of the World’

Kai-Fu Lee, author of ‘AI Superpowers: China, Silicon Valley, and the New World Order’ – an eminently readable and well-researched book – notes that China pumped-in 48 percent of the total global investment in AI (Artificial Intelligence) startups in 2017. This is the result of a highly-coordinated nationwide effort led by the Chinese government and BAT (Baidu, Alibaba and Tencent), the ‘big-three internet’ and e-commerce giants.

Lee is no apparatchik of the Chinese Communist Party’s (CPC) propaganda department but rather, a celebrated serial entrepreneur with a foot each in the US and China. He led the Google China team before branching out on his own in 2009.

Hitherto, China was known as the factory of the world, mass-producing consumer goods at cut-throat prices. Along the way, it perfected the art of reverse engineering and cloning almost anything – be it brand labels, automobiles, electronics or heavy equipment. Gradually, Chinese entrepreneurs learnt to make incremental improvements to cater to the preferences of its huge market.

China’s Policy of ‘Mass Entrepreneurship’ & ‘Mass Innovation’

In fact, just fifteen years ago, China looked at India with envy for emerging as an IT software powerhouse. This author, as Consul General of India in Shanghai in 2006, had a hard time coping with requests from the Chinese county, city and provincial officials, to facilitate a visit to Bangalore. For them it was almost a rite of passage.

But, flying under the radar, while the global attention was focused on Goliaths like Google, Amazon, Apple, Facebook and Uber, the Chinese BAT first crawled and then sprinted on to the world stage. China has since built a roster of technology giants worth over a trillion dollars, a feat accomplished by no other country outside the US.

President Xi Jinping who came to power in 2012, quietly launched the second ‘Great Leap Forward’ in the IT and AI spheres. Speaking at the World Economic Forum in September 2014, Premier Li Keqiang introduced China’s new policy of ‘mass entrepreneurship and mass innovation’.

Chinese Quest for Global Tech Leadership Will Neither Be Smooth Nor Go Unchallenged

It is as if monetary sluice gates have since been flung open. Investments by the state quadrupled in 2015 to USD 27 billion to foster mass innovation, from USD 7 billion in 2013. 6,600 new startup incubators have been added since 2015. “I have spent decades deeply embedded both in Silicon Valley (SV) and China's tech scene... I can tell you that SV looks downright sluggish compared to its competitor,” observes Lee.

The Chinese government knows that a part of funds may be wasted, but hopes to spark an innovation competition among cities, researchers, and enterprises, through a massive cash infusion. It is moot if its experience of mass production can be replicated to engender ‘mass innovation’ or wholesale creativity? That said, Chinese quest for global tech leadership will neither be smooth nor go unchallenged. 

Its policy of ‘innovation with Chinese characteristics’ both facilitates and stunts R&D. A natural by-product of automation and AI applications is job redundancy. But CPC mortally fears unemployment. It is also apprehensive of global stars like Jack Ma (founder of Alibaba). It is widely believed that he was edged out of chairmanship of Alibaba, at the establishment’s behest.

Tencent has also been slapped on the wrist. The state refused to approve new mobile video games, a money-spinner for Tencent, as CPC felt that they were luring young minds into infructuous endeavours. Similarly, several popular TV shows were deemed decadent and banned.

Chinese AI Momentum Will Be Checked By ‘Trust Deficit’

The Chinese momentum will be further checked due to the trust-deficit with and the apprehensions of the free-world. India for one, which is expected to be the world’s third largest USD 10 trillion economy around 2030, is unlikely to use Chinese AI applications in sensitive areas such as banking, energy, communications, aviation, government and defense.

Countries like the US, aware of Chinese vision of industry dominance, will engage in technology-denial if not in aggressive counter-measures. 

PwC estimates AI deployment will add USD 15.7 trillion to global GDP by 2030. Fortunately, other nations are also competing for a slice of the cake. India too has the four key elements to ascend the IT value chain and harness the gains of AI, IOT (Internet of things), deep-learning and 4IR (fourth industrial revolution).

These are – big data, capable human resources, computing power and favourable policy environment. The government has unveiled wholesome initiatives like Digital India and Startup India to strengthen the nation’s tech ecosystem.

India is now the third country after the US and China to incubate the largest number (19) of Unicorns (market cap of at least USD 1 billion). And there are more budding Unicorns among the 7,200 startups that have been incubated in the last 5 years (NASSCOM 2018 report).

All the same, AI will be a mixed blessing. It will accentuate unemployment as well as the digital and wealth divide among nations. However, humanity will learn to cope with the challenges while enjoying the fruits of progress, as it did, in the wake of the previous industrial revolutions.

(The writer is a former High Commissioner to Canada, Ambassador to South Korea and Official Spokesperson of the Ministry of External Affairs. He can be reached at @AmbVPrakash. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)