In speech tech, Chinese are beating American firms in all languages—including English. The world’s top voice recognition startup is China’s iFlytek. Its user base is seven hundred million, almost twice the 375 million people who speak to Apple’s Siri. In system performance competitions, iFlytek regularly beats teams from Google, Microsoft, Facebook, IBM and MIT, all in its second language. At Stanford’s international challenge for machine reading comprehension, Chinese teams won three of the top five spots, including first place. Baidu developed a human-level speech recognition system a year before Microsoft did.
Who was the U.S. Army’s major supplier of commercial drones until 2017—when the United States prohibited purchases for foreign suppliers? Shenzhen drone maker DJI, which controls 70 percent of the global market. Drones would be just miniature hobby helicopters without elementary AI, which gives them computer vision for targeting weeds or weapons, and enables them to operate in swarms. As the recent attack on Saudi Arabia’s principal oil facilities demonstrated, the world has just begun to discover the security consequences of AI-enhanced drones operating literally below the radar. Of the world’s top five commercial drone brands, three are Chinese; only one is American.
5G infrastructure will be the backbone that enables AI to reach further into everyday life, from automated cars to smart glasses. China’s Huawei is the world’s leading supplier of this telecom equipment. Not only does it own the Chinese market, which will be the world’s largest, but its 28 percent global market share nearly equals the combined shares of its two top competitors. Of the top four brands that will build 5G infrastructure, two are Chinese and zero are American. Chinese firms own twice as many 5G-essential patents as American firms. While the outcome of the current U.S. government campaign against Huawei remains uncertain, the company is currently delivering 5G systems well ahead of all competitors and is bringing a 5G phone to market a year ahead of Apple, the company that invented the iPhone.
Financial markets reflect these realities. Five years ago, two of the world’s twenty most valuable internet companies were Chinese; today, nine are. The “Seven Giants of the AI age”—Google, Amazon, Facebook, Microsoft, Baidu, Alibaba and Tencent—are split on either side of the Pacific. Of every ten venture capital dollars invested in AI in 2018, five went to Chinese startups; four to American firms. Of the world’s top ten AI startups, half are American and half are Chinese.
Chinese investments in AI research and development have surged to American levels, and the results are beginning to show it. The blunt truth is that China is laying the intellectual groundwork for a generational advantage in AI. According to the Allen Institute for Artificial Intelligence’s authoritative assessment, China will overtake the United States this year in the most-cited 50 percent of AI papers. It will take the lead in the most-cited 10 percent next year. And by 2025, the United States will fall to second in the top 1 percent of papers. (Fortunately, in breakthrough papers, China remains behind.) In public patents for AI technologies, China passed the United States in 2015, and last year filed 2.5 times more than America. In machine learning’s hottest subfield—deep learning—China has six times more patent publications than the United States. (Raw numbers, however, must be taken with a grain of salt, since not all patents are equal.)
China is investing heavily in the necessary hardware as well. In 2001, China had none of the world’s five hundred fastest supercomputers. Today, it has 219 (the United States has 116). And while China’s supercomputers previously relied on American semiconductors, its top machine today was built entirely with domestically-manufactured processors.
Like Olympic athletes, AI researchers are eager to demonstrate their progress and prowess in international competitions. As mentioned earlier, in 2017, DeepMind’s AlphaGo Master defeated the Go world’s top champion Lee Sedol a decade sooner than experts had predicted. Eight months later, Tencent’s own Go program, called “Fine Art,” also beat Sedol. And Fine Art won despite giving Sedol a two-turn head start—a handicap DeepMind has been unwilling to offer.
Meanwhile, at the International Aerial Robotics Competition, the world’s longest-running university robotics competition, the top three performers last year were all Chinese entries. And in the world’s most prestigious computer science competition for secondary school students, the International Olympiad in Informatics, Chinese have won eighty-four gold medals while Americans have won fifty-two.
Achieving this success in competitions reflects the investment China has made in cultivating talent. In AI, brainpower matters more than computing power. China annually graduates four times as many stem students than the United States (1.3 million vs. 300,000) and three times as many computer scientists (185,000 vs. 65,000). In the U.S. News & World Report ranks, China’s Tsinghua University is number one in the world in computer science. Of every ten computer science Ph.D.s graduating in the United States today, three are American and two are Chinese. Three decades ago, only one of every twenty Chinese students studying abroad returned home. Now, four of every five do.
CULTURALLY, MANY Chinese embrace what many Americans see as a nightmare “surveillance state.” Even for applications that will clearly improve public health and safety, Americans are evenly split between those who are “very willing” and those who are “very unwilling” to share personal data. In China, the willing outnumber the unwilling five to one. As an American-educated Chinese colleague observed, Chinese are as puzzled by Americans’ acceptance of monthly mass shootings as much as Americans are puzzled by Chinese acceptance of government surveillance that keeps them and their families safe from such horrors.
China’s government, laws and regulations, public attitudes about privacy, and thick cooperation between companies and their government are all green lights for its advance of AI. In the United States and Europe, yellow and red lights abound. President Donald Trump’s statements about AI have essentially been rhetorical. By contrast, China’s president gets it. AI is a central pillar in his agenda to “make China great again.” In a process that reminds careful observers of the leadership of Amazon and Google, he has defined key performance indicators for its development, provided massive funding for specific projects and done whatever possible to create favorable tailwinds. Wherever the Chinese government can protect companies (in its domestic market), support national champions (through subsidies and access to government data) and enable corporations leading AI charge, it does. It is ambitious performance targets that incentivize China’s fifteen cities with populations of more than ten million and one hundred cities with populations of more than one million to compete in deploying sensors in highway systems (that will support driverless cars), cameras in the “sharp eyes” program that surveil public and private properties, and an array of similar collection technologies that create “smart cities.”
On each of these fronts, there are, of course, competing considerations. A more comprehensive net assessment would require drilling down at length in each area of competition. On the current path, we expect that, for the next decade, the United States will maintain its lead in enterprise software (e.g. business tools like automatic billing), advanced semiconductors and quantum computing. Nonetheless, assessing the rivalry in the decade ahead, we believe that the United States and China must be recognized as peer competitors. U.S. advantages include its position as first mover (that has allowed Facebook and Google to lead not just in American domestic markets but worldwide); the current cadre of superstars pushing the frontier of research; the ability and determination of Silicon Valley to recruit the 0.0001 percent most capable individuals from 7.7 billion people around the globe; and an ecosystem that actively encourages disruptive invention and innovation.
At the same time, American AI faces serious headwinds, including a culture that values privacy over security, distrusts authority and is suspicious of government; it companies wary of working with the U.S. Defense Department and intelligence agencies; dysfunctional public policies inhibiting recruitment and immigration; laws that make it difficult to compile big data sets; and the prospect of further regulations and antitrust action against the companies that are now America’s national champions—and are driving American advances in this arena.
In the longer-term competition, China’s advantages begin with its population of 1.4 billion that creates an unparalleled pool of data and talent, the largest domestic market in the world, and information collected by companies and government in a culture that values security over privacy. Its commitment to education creates an army of less expensive labor willing and able to spend substantial amounts of time cleaning data sets. Its universities are graduating computer scientists in multiples of their American counterparts, all of them eager to develop algorithms to solve social problems. Because a primary asset in applying AI is the quantity of quality data, China has emerged as the Saudi Arabia of the twenty-first century’s most valuable commodity. The total data created, captured and copied in China is already far greater than in the United States. In addition, the country has hungry entrepreneurs like Alibaba’s Jack Ma and Tencent’s Pony Ma; a government that is leading a whole-of-nation campaign to become the world’s leader in AI; and a national sense that China’s time has come.