AI Superpowers: China, Silicon Valley, and the New World Order

by Kai-Fu Lee

Much of the difficult but abstract work of AI research has been done, and it’s now time for entrepreneurs to roll up their sleeves and get down to the dirty work of turning algorithms into sustainable businesses.

Given much more data, an algorithm designed by a handful of mid-level AI engineers usually outperforms one designed by a world-class deep-learning researcher.

Moving from discovery to implementation reduces one of China’s greatest weak points (outside-the-box approaches to research questions)

If one’s only edge is a single novel idea, that idea will invariably be copied, your key employees will be poached, and you’ll be driven out of business by VC-subsidized competitors.

The messy markets and dirty tricks of China’s “copycat” era produced some questionable companies, but they also incubated a generation of the world’s most nimble, savvy, and nose-to-the-grindstone entrepreneurs.

China’s alternate digital universe now creates and captures oceans of new data about the real world. That wealth of information on users—their location every second of the day, how they commute, what foods they like, when and where they buy groceries and beer—will prove invaluable in the era of AI implementation.

Rigorous copying of perfection was seen as the route to true mastery.

The most valuable product to come out of China’s copycat era wasn’t a product at all: it was the entrepreneurs themselves.

The American users’ maps show a tight clustering of green and yellow in the upper left corner where the top search results appeared, with a couple of red dots for clicks on the top two results. American users remain on the page for around ten seconds before navigating away. In contrast, Chinese users’ heat maps look like a hot mess. The upper left corner has the greatest cluster of glances and clicks, but the rest of the page is blanketed in smudges of green and specks of red. Chinese users spent between thirty and sixty seconds on the search page, their eyes darting around almost all the results as they clicked promiscuously.

So when cheap smartphones hit the market, waves of ordinary citizens leapfrogged over personal computers entirely and went online for the first time via their phones.

For mobile-first users, the internet wasn’t just an abstract collection of digital information that you accessed from a set location. Rather, the internet was a tool that you brought with you as you moved around cities—it should help solve the local problems you run into when you need to eat, shop, travel, or just get across town.

After driving Uber out of the Chinese ride-hailing market, Didi has begun buying up gas stations and auto repair shops to service its fleet,

Frictionless and hooked into mobile, the apps soon turned into tools for “tipping” the creators of online articles and videos. Micro-payments of as little as fifteen cents flourished. The companies also decided not to charge commissions on the vast majority of transfers, meaning people accepted mobile payments for all transactions—none of the mandatory minimum purchases or fifty-cent fees charged by U.S. retailers on small purchases with credit cards.

That type of data collection may rub many Americans the wrong way. They don’t want Big Brother or corporate America to know too much about what they’re up to. But people in China are more accepting of having their faces, voices, and shopping choices captured and digitized. This is another example of the broader Chinese willingness to trade some degree of privacy for convenience.