Industry pioneer Kai-Fu Lee says China can rival the US in artificial intelligence thanks to the expertise of companies from Alibaba to Baidu and join a global technology transformation that will eclipse the mobile revolution.
American companies like Microsoft Corp. and Alphabet Inc. now have clear leadership, but much like the early days of the internet, China will catch up from its private sector through rapid iteration, Lee said. The bestselling author on AI, who founded Sinovation Ventures more than a decade ago, has been at the center of China’s growing adoption of the technology, backing some of the biggest startups in the field like Megvii and Meitu.
Companies around the world have been rushing to show off their latest AI creations since OpenAI Inc.’s ChatGPT demonstrated the technology’s potential to a wider audience. Baidu Inc. will unveil its own ChatGPT competitor on Thursday, which will be China’s key contender in the race with the US to stake out the burgeoning arena. Lee called the Beijing firm China’s apparent leader in this field, although it will be far from alone.
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“The US continues to be the game-changing innovator in the world,” the 61-year-old VC founder said from his Beijing office in his first interview with overseas media since the end of Covid restrictions. But China’s internet giants like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. “all build large models on par with OpenAI, Microsoft and Google”.
Lee’s 2018 book AI Superpowers was an early exploration of the growing conflict between the US and China in the tech industry, detailing each country’s strengths and weaknesses. He released AI 2041 with sci-fi writer Chen Qiufan two years ago to envision what the technology would be capable of decades in the future.
His optimism about China’s tech players comes despite Washington’s tightening of trade sanctions that cut off access to the latest hardware and deepen divisions between the two internet spheres. The AI market will remain decoupled, he said, much like internet services today. But the former Apple Inc. and Microsoft exec sees those as just “minor obstacles in the face of a tidal wave revolution.”
U.S. efforts to limit China’s rise as a geopolitical rival include orders to buy the gold standard for AI training semiconductors — Nvidia Corp.’s A100. and its successor H100 chip – out of China. Lee believes Chinese AI companies will be able to find replacements, although it won’t be an ideal situation for those who want to do extensive training.
“There are about other chips that can be used as a replacement. Nvidia has the A800, which is pretty good,” Lee said, adding, “It’s also by no means a desperate situation.”
He also does not foresee a full separation between researchers in the two countries, pointing to academic and best practice exchanges as a means of collaborating at lower levels. “The researchers are still friends, they will borrow ideas from each other,” he said.
“It’s not Chinese or American. I think all companies will tend to think about their core business and how to integrate with AI,” Lee said. Comparing the integrated AI systems of the future with Microsoft’s Windows and Google’s Android, the VC chief said that the AI 2.0 change will be a more radical transformation than the mobile era, and huge prizes await the companies able to establish the definitive next-generation platforms.
“All these giants are going to gain a lot because the way this technology can connect to their existing product line and their users is not difficult,” he said. “Actually, it’s quite trivial.” Alibaba could see better click-throughs in its AI-enhanced e-commerce outlets, or ByteDance Ltd. could boost TikTok’s appeal with AI-generated videos.
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Still, the US retains a significant lead, partly because their companies started earlier, and partly because they have better data to train their AI models on — which will determine exactly how useful a chatbot or tool is to generate content will be.
“I tried some of these so-called Chinese ChatGPTs. I would say they are not as good as ChatGPT,” Lee said. He sees the difference in that the English-language services have more and better quality data than their Chinese competitors. But “in terms of technologies, I’ve been pretty impressed with some companies.”
According to Lee, it will be “maybe a year” before Chinese firms get an equal or possibly larger amount of data. “China remains the hardest working, most persistent creator of execution and value.”
In terms of eventual winners, Lee said that if startups want to break through and outperform larger-budget incumbents, they need to do two things.
“You build everything AI first, not mobility first, not Windows first, not PC first. Second, harness the power of open and the power of free,” he said, implying that open source and free software have a chance for the widest adoption. “But this isn’t for the run-of-the-mill startup, is it? So we need to see which company has that ambition, that experience, and that courage to try and build something really, really big on an AI-first platform.”
