China’s A.I. Rules

Deep Linking
March 10, 2020
Prioritizing Accountability and Trust
March 10, 2020

China’s A.I. Rules

If you think of China as a country that copies rather than innovates—think again. China is a global leader in artificial intelligence.

If you think of China as a country that copies rather than innovates—think again.

China Rules

China is a global leader in artificial intelligence. Under President Xi Jinping, the country has made tremendous strides in many fields, but especially in A.I. Businesses and government have collaborated on a sweeping plan to make China the world’s primary A.I. innovation center by 2030, and it’s already making serious progress toward that goal. That plan is unlikely to be repealed by a new government; last March, China abolished Xi’s term limits and will effectively allow him to remain in power for life.
That gives China an incredible advantage over the West. It also gives three of China’s biggest companies—Baidu, Alibaba, and Tencent—superpowers. Collectively, they’re known as the BAT, and they’re all part of the country’s well-capitalized, highly organized A.I. plan. The BAT is important to you even if you’ve never used them and don’t do any business in China.

That’s because these companies are now well established in Seattle and around San Francisco, and they are investing significantly in U.S. startups. Alibaba, China’s version of Amazon, will invest $15 billion into A.I. research over the next three years, planting research centers in seven cities worldwide, including San Mateo, California, and Bellevue, Washington. Baidu (a Chinese search-engine company often likened to Google) established an A.I. research center in Silicon Valley, and Tencent (the developer of the mega-popular messaging app WeChat) began hunting for American talent when it opened an A.I. lab in Seattle two years ago. It has since upped its stakes in companies like Tesla and Snap. The payoff for the Chinese is not just a typical return on investment—Chinese firms expect IP as well. China-based A.I. startups now account for nearly half of all AI. investments globally.

China’s Rules

In late 2019, China began requiring all citizens to submit to facial recognition in order to apply for new internet or mobile services, and telecommunications companies must deploy A.I. to check the identities of people registering SIM cards. Chinese social media platforms require users to sign up with their “real-name identities.” In Chinese schools, surveillance cameras outfitted with computer vision systems are in widespread use and track whether students are paying attention, whether they are attempting to cheat or sleep, and how focused they are during lectures. These and other national standards make it easier for the government to track its citizens. China’s social credit system, an algorithmic reputation system developed by the government, will standardize assessments of citizens’ and businesses’ behavior and activity. It’s expected to be fully operational in the next year.

Numerous complaints have criticized China’s use of personal data, from allegations of tracking, detaining and abusing the Uighur Muslim community to myriad other human rights abuses in factories, where smart cameras find unproductive workers and alert human minders to physically strike them as “encouragement.” In November 2019, a professor filed a lawsuit against the use of facial recognition technology. Professor Guo Bing of Zhejiang Sci-Tech University alleged that when an amusement park scanned his face without consent, it violated the country’s consumer rights protection law. It is the first lawsuit of its kind in China.

China’s Data Surplus

The country’s massive population—nearing 1.4 billion people—offers researchers and startups there command of what may be the most valuable natural resource in the future—human data—without the privacy and security restrictions common in much of the rest of the world. If data is the new oil, then China is the new OPEC. The kind of rich data the Chinese are mining can be used to train A.I. to detect patterns used in everything from education and manufacturing to retail and military applications. The Chinese startup Sensetime is pioneering myriad recognition technologies, such as a system that provides advertisers real-time feedback on what people are watching, technology that can extract customer information and carry out statistical analysis in crowded areas like shopping malls and supermarkets, and simultaneous recognition of everything in a scene, whether it’s people, pets, automobiles, trees or soda cans.

Risk Profile

We have failed and are continuing to fail to see China as a militaristic, economic, and diplomatic pacing threat when it comes to A.I. China has already used its Belt and Road Initiative as a platform to build international partnerships in both physical and digital infrastructure, and it is making surveillance technologies available to countries with authoritarian regimes. Ecuador’s surveillance system, called ECU-911, was built by two Chinese companies: the state-controlled C.E.I.E.C. and Huawei. The system promised to curb high murder rates and drug crime, but it was too expensive an investment. As a result, a deal was struck for a Chinese-built surveillance system financed with Chinese loans. It was an entrée to a much more lucrative deal: Ecuador eventually signed away big portions of its oil reserves to China to help finance infrastructure projects. Similar package deals have been brokered in Venezuela and Bolivia.

China is quietly weaponizing A.I., too. China’s People Liberation Army is catching up to the U.S. when it comes to military applications, using A.I. for such tasks as spotting hidden images with drones. The Chinese military is equipping helicopters and jet fighters with A.I., the government created a top-secret military lab—a Chinese version of DARPA in the U.S.—and it’s building billion-dollar A.I. national laboratories. China’s military is achieving remarkable A.I. successes, including a recent test of “swarm intelligence,” that can automate dozens of armed drones.

The Bottom Line

有备则无患 is a Chinese proverb that roughly translates to “forewarned is forearmed.” Now that you know what’s coming, reframe your thinking of China as simply the world’s factory.