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

by Kai-Fu Lee

Today, Zhongguancun is the beating heart of China’s AI movement.

Deep-learning-based programs can now do a better job than humans at identifying faces, recognizing speech, and issuing loans.

Those people who watched Ke’s frustration responded in kind. AlphaGo may have been the winner, but Ke became the people’s champion. In that connection—human beings giving and receiving love—I caught a glimpse of how humans will find work and meaning in the age of artificial intelligence.

“Artificial intelligence is the elucidation of the human learning process, the quantification of the human thinking process, the explication of human behavior, and the understanding of what makes intelligence possible. It is men’s final step to understand themselves, and I hope to take part in this new, but promising science.”

Doing this requires massive amounts of relevant data, a strong algorithm, a narrow domain, and a concrete goal.

Deep learning is what’s known as “narrow AI”—intelligence that takes data from one specific domain and applies it to optimizing one specific outcome. While impressive, it is still a far cry from “general AI,” the all-purpose technology that can do everything a human can.

That global shift is the product of two transitions: from the age of discovery to the age of implementation, and from the age of expertise to the age of data.

Deep-learning pioneer Andrew Ng has compared AI to Thomas Edison’s harnessing of electricity: a breakthrough technology on its own, and one that once harnessed can be applied to revolutionizing dozens of different industries.

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.

This brings us to the second major transition, from the age of expertise to the age of data. Today, successful AI algorithms need three things: big data, computing power, and the work of strong—but not necessarily elite—AI algorithm engineers.

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.

The transition from expertise to data has a similar benefit, downplaying the importance of the globally elite researchers that China lacks and maximizing the value of another key resource that China has in abundance, data.

They represented a tidal wave of online-to-offline (O2O) startups that brought the convenience of e-commerce to bear on real-world services like restaurant food or manicures.

WeChat became the universal social app,

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.

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.

more data leads to better products, which in turn attract more users, who generate more data that further improves the product.

AI-driven automation in factories will undercut the one economic advantage developing countries historically possessed: cheap labor.

The AI world order will combine winner-take-all economics with an unprecedented concentration of wealth in the hands of a few companies in China and the United States. This, I believe, is the real underlying threat posed by artificial intelligence: tremendous social disorder and political collapse stemming from widespread unemployment and gaping inequality.

We’ve built deeply entrenched cultural values around this exchange, and many of us have been conditioned to derive our sense of self-worth from the act of daily work. The rise of artificial intelligence will challenge these values and threatens to undercut that sense of life-purpose in a vanishingly short window of time.

Chinese media reported that the earliest version of Xiaonei even went so far as to put Facebook’s own tagline, “A Mark Zuckerberg Production,” at the bottom of each page.

This first phase of the copycat era—Chinese startups cloning Silicon Valley websites—helped build up baseline engineering and digital entrepreneurship skills that were totally absent in China at the time. But it was a second phase—Chinese startups taking inspiration from an American business model and then fiercely competing against each other to adapt and optimize that model specifically for Chinese users—that turned Wang Xing into a world-class entrepreneur.

Company mission statements are clean and lofty, detached from earthly concerns or financial motivations.

The core motivation for China’s market-driven entrepreneurs is not fame, glory, or changing the world. Those things are all nice side benefits, but the grand prize is getting rich, and it doesn’t matter how you get there.

While Socrates encouraged his students to seek truth by questioning everything, ancient Chinese philosophers counseled people to follow the rituals of sages from the ancient past. Rigorous copying of perfection was seen as the route to true mastery.

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.

At the park’s entrance hung a sign: “Disneyland is too far, please come to Shijingshan!”

Chinese technology during the copycat era: a shiny exterior that had been copied from America but a hollow shell that held nothing innovative or even functional.

By blindly imitating others—or so the theory goes—you stunt your own imagination and kill the chances of creating an original and innovative product.

American public companies tend to treat international markets as cash cows, sources of bonus revenue to which they are entitled by virtue of winning at home.

Lean startups must sense the subtle shifts in consumer behavior and then relentlessly tinker with products to meet that demand.

Chinese entrepreneurs have no such luxury. If they succeed in building a product that people want, they don’t get to declare victory. They have to declare war.

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.

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.

Jack Ma was crowned the richest man in China.

Ma had become a national hero, but a very relatable one. Blessed with a goofy charisma, he seems like the boy next door. He didn’t attend an elite university and never learned how to code. He loves to tell crowds that when KFC set up shop in his hometown, he was the only one out of twenty-five applicants to be rejected for a job there.

“O2O Revolution,” short for “online-to-offline.” The terminology can be confusing but the concept is simple: turn online actions into offline services.

In effect, WeChat has taken on the functionality of Facebook, iMessage, Uber, Expedia, eVite, Instagram, Skype, PayPal, Grubhub, Amazon, LimeBike, WebMD, and many more.

While Airbnb largely remains a lightweight platform for listing your home, the company’s Chinese rival, Tujia, manages a large chunk of rental properties itself.

“I’d rather cry in the back of a BMW than smile on the back of a bicycle.”

The IoT refers to collections of real-world, internet-connected devices that can convey data from the world around them to other devices in the network.

Like the long-buried organic matter that became fossil fuels powering the Industrial Revolution, the rich real-world interactions in China’s alternate internet universe are creating the massive data that will power its AI revolution.

Seven Giants of the AI age, which include Google, Facebook, Amazon, Microsoft, Baidu, Alibaba, and Tencent.

Among the Seven AI Giants, Google—more precisely, its parent company, Alphabet, which owns DeepMind and its self-driving subsidiary Waymo—stands head and shoulders above the rest.

Of the top one hundred AI researchers and engineers, around half are already working for Google.

Alibaba has taken the lead on “City Brains”: massive AI-driven networks that optimize city services by drawing on data from video cameras, social media, public transit, and location-based apps.

In fact, when President Trump took office just three months after the report’s debut, he proposed cutting funding for AI research at the National Science Foundation.

If AlphaGo was China’s Sputnik Moment, the government’s AI plan was like President John F. Kennedy’s landmark speech calling for America to land a man on the moon. The report lacked Kennedy’s soaring rhetoric, but it set off a similar national mobilization, an all-hands-on-deck approach to national innovation.

There will be circumstances that force an autonomous vehicle to make agonizing ethical decisions, like whether to veer right and have a 55 percent chance of killing two people or veer left and have a 100 percent chance of killing one person.

Should your self-driving car sacrifice your own life to save the lives of three other people?