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.

Harnessing the power of AI today—the “electricity” of the twenty-first century—requires four analogous inputs: abundant data, hungry entrepreneurs, AI scientists, and an AI-friendly policy environment.

PricewaterhouseCoopers estimates AI deployment will add $15.7 trillion to global GDP by 2030. China is predicted to take home $7 trillion of that total, nearly double North America’s $3.7 trillion in gains. As the economic balance of power tilts in China’s favor, so too will political influence and “soft power,” the country’s cultural and ideological footprint around the globe.

As deep learning washes over the global economy, it will indeed wipe out billions of jobs up and down the economic ladder: accountants, assembly line workers, warehouse operators, stock analysts, quality control inspectors, truckers, paralegals, and even radiologists, just to name a few.

Based on the current trends in technology advancement and adoption, I predict that within fifteen years, artificial intelligence will technically be able to replace around 40 to 50 percent of jobs in the United States.

Combine these three currents—a cultural acceptance of copying, a scarcity mentality,

and the willingness to dive into any promising new industry—and you have the psychological foundations of China’s internet ecosystem.

American companies treat China like just any other market to check off their global list. They don’t invest the resources, have the patience, or give their Chinese teams the flexibility needed to compete with China’s world-class entrepreneurs.

In reality, they need to put in real work tailoring their products for Chinese users or building new products from the ground up to meet market demands.

The Lean Startup. Core to its philosophy is the idea that founders don’t know what product the market needs—the market knows what product the market needs.

Instead of spending years and millions of dollars secretly creating their idea of the perfect product, startups should move quickly to release a “minimum viable product” that can tease out market demand for different functions.

Today, Meituan Dianping is valued at $30 billion, making it the fourth most valuable startup in the world, ahead of Airbnb and Elon Musk’s SpaceX.

China’s technology ecosystem, and that ecosystem’s greatest asset: its tenacious entrepreneurs.

Larger city and provincial governments pioneered different models for “guiding funds,” a mechanism that uses government money to spur more venture investing. The funds do that by increasing the upside for private investors without removing the risk. The government uses money from the guiding fund to invest in private venture-capital funds in the same role as other private limited partners. If the startups that fund invested in (the “portfolio companies”) fail, all the partners lose their investment, including the government.

With the rise of O2O, WeChat had grown into the title bestowed on it by Connie Chan of leading VC fund Andreesen Horowitz: a remote control for our lives.

It had become a super-app, a hub for diverse functions that are spread across dozens of different apps in other ecosystems. In effect, WeChat has taken on the functionality of Facebook, iMessage, Uber, Expedia, eVite, Instagram, Skype, PayPal, Grubhub, Amazon, LimeBike, WebMD, and many more.

When looking to disrupt a new industry, American internet companies tend to take a “light” approach.

They generally believe the internet’s fundamental power is sharing

information, closing knowledge gaps, and connecting ...

In China, companies tend to go “heavy.” They don’t want to just build the platform—they want to recruit each seller, handle the goods, run the delivery team, supply the scooters, repair those scooters, and control the payment.

These companies win both by outsmarting their opponents and by outworking, outhustling, and outspending them on the street.

The market research firm iResearch estimated in 2017 that Chinese mobile payment spending outnumbered that in the United States by a ratio of fifty to one.

using government funding to invest in economic and technological upgrades is a risky business.

the Chinese mentality is that you can’t let the perfect be the enemy of the good.

The second catalyst is one that many in the technology world today take for granted: the creation of the venture-capital industry.

as described in Elisabeth Kübler-Ross’s theory of the five stages of grief, before acceptance comes bargaining.

the greatest opportunity for human-AI symbiosis: AI will do the analytical thinking, while humans will wrap that analysis in warmth and compassion.

In the letter, titled “A Sense of Purpose,” Fink wrote, We . . . see many governments failing to prepare for the future, on issues ranging from retirement and infrastructure to automation and worker retraining. As a result, society increasingly is turning to the private sector and asking that companies respond to broader societal challenges. . . . Society is demanding that companies, both public and private, serve a social purpose. . . . Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.