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Chinese companies, large and small, invested heavily in A.I. over the past decade. Yet the breakout success of ChatGPT appears to have surprised Chinese tech giants, and now they’re rushing to catch up.

The debate is about more than just a chatbot. Whichever country wins the A.I. arms race could corner a lucrative share of the global economy potentially worth trillions of dollars, and get an edge in the military competition between Beijing and Washington.

Beijing’s AI policy priorities are clear. The “Next Generation Artificial Intelligence Development Plan,” announced by China’s State Council in July 2017, called for China to catch up on AI technology and applications by 2020, and to become a global AI innovation hub by 2030. Chinese President Xi Jinping hammered the point home in his 19th Party Congress speech in October, when he mentioned the development of advanced manufacturing and the promotion of further integration of the Internet, big data and artificial intelligence with the real-world economy. Beijing has placed huge bets on AI for a host of political and economic reasons, from improving governance capacity to improving policy development and surveillance. The plan calls for China to lead the way in developing a regulatory environment to both encourage AI development and to mitigate the potential downsides of AI. A few months after the national plan’s announcement in July, the Ministry of Science and Technology (MOST) designated Baidu to lead the autonomous vehicle platform, Tencent for medical, Alibaba for Smart Cities, and iFlyTek for speech interfaces. These plans should be taken seriously, as the Chinese government has shown a strong track record in delivering results. For example, Beijing announced in 2010 that China would become the world’s leader in adopting high-speed rail (HSR). Today it has 60% of the world’s HSR market. In 2014, the Chinese government announced the “Mass Entrepreneurship and Innovation Plan.” Today there are business 8000 incubators in China, compared to 1400 in 2014. These plans have teeth, both due to the deadlines and metrics set out at the national level, as well as the local companies that are likely to take these directions as top priorities. We can expect a similar trajectory for China’s AI policies. Historically, the Chinese government has been open-minded towards technology development. When a new technology comes out, the government will give it the benefit of doubt and let it grow, rather than stifle it with policy or endless debates. Also, the environment in China is more conducive to fast launch and iteration. There is a general belief that it is better to launch something and then get it approved later. This allows Chinese businesses to generate real data at scale, which in turn allows technology to improve over a shorter period of time, particularly once AI is introduced into the equation. For example, while in the US, truckers’ unions are petitioning the Department of Transportation to delay autonomous truck testing, in China, the Xiong’an New Area, a planned smart city development southwest of Beijing, is being designed from the ground up with full autonomy in mind. Various highway authorities are willing to develop road augmentation, special lanes, or move warehouses near highway exits, all to facilitate faster deployment of autonomous trucks. We also see major initiatives in cities, following the central government’s call to action. Shanghai, Nanjing, Wuhan, and Tianjin are but a few of the cities coming out with their own AI initiatives. As with past policies, much of the resources will be applied at the provincial and city government levels. The types of resources may include subsidies for top talent (especially overseas talent); guidance for top VC funds, with the government playing the role of limited partner (LP) but offering some of its upside to the general partners (GPs) of the funds; special programs for top AI companies and start-ups (free rent, subsidy for local hiring, housing and private school for top talents); and technical awards for companies and individuals. Finally, the US, EU, and China will also compete to be out in front on developing a regulatory regime around AI technologies and applications. The National Plan’s explicit recognition of the need for regulatory, legal, and ethical principles for AI development and use represents an uncommonly foresighted approach. Of course, the government’s approach to AI regulation, ethics, and economic adjustment will reflect Beijing’s broader model of governance and ideology. Given its preference for a state-centric approach to international issues, for example, it is possible China will launch an initiative via the UN to establish first an automation/AI-related “code of conduct,” or basic regulatory approach, followed by a special committee on the topic and eventually an oversight body operating within a UN framework. Such an initiative would put China at the forefront of developing a global approach to these issues. Beijing has attempted a similar approach on cybersecurity issues, which it argues have a global impact and require a global regulatory response.

China has given the world a sterling report card for its economic reform over the last four decades. Its achievements have won admirations and applauses across the world, from men on the street to political elites. Its success stories are inspirations to leaders of the emerging economies who see in China an alternative development model, a growth path that is strikingly different from the conventional economic text. But its meteoric rise has also stirred concerns and fears in the West. To the advocates of Western democracy, China is a centralized authoritarian regime, the rise of which is a threat to the liberal international order. Particularly, America views China as a revisionist power that poses an imminent challenge to its global hegemony. In a radio interview last year, U.S. Secretary of State Mike Pompeo alleged that China is “buying an empire” with its Belt and Road Initiative, and America intends to “oppose them at every turn”. Are such allegations justified or misguided? What sets China’s political system apart from the rest of the world? China’s centralized system is rooted in its history “The Chinese tradition of order imposed by a centralized system” is “a pattern that goes back at least 3,500 years”, says Newt Gingrich, former US House Speaker in his newly published book “Trump Vs China: Facing America’s Greatest Threat”. Newt Gingrich, a harsh critic of the Communist Party of China (CPC) has no empathy for China. However, he is right in pointing out that China’s political system under CPC is rooted in thousands of years of its history, a system that is inextricably embedded in its millennial-old civilization. Centralization has been China’s mainstream political philosophy spanning from the ancient dynasties to modern days. China has remained a unified nation after Qinshihuang’s conquest of the Warring States more than 2,000 years ago despite the rise and fall of the dynasties, thanks to the centralized system. It glues the immense territory together and prevents China from falling into the fate of Europe – disintegration into small nation states. China’s centralized system of governance is run based on meritocracy – a key tenet of Confucianism, which is the bedrock of Chinese civilization. “When the Great Principle prevails, the world belongs to all, rulers are selected according to their wisdom and ability (⼤道之⾏也，天下为公，选贤与能),” said Confucius. In ancient China, talents were picked based on the principle of meritocracy through an open imperial examination system to serve the ruler of the day. Likewise, in present day China, leaders are selected after they have passed through tiers of ability and loyalty mill tests. Centralization and meritocracy are the foundation of Chinese polity. Despite regime change, they have remained China’s unchanged statecraft throughout its history. CCP’s consultative democracy is, in fact, a blend of centralization and meritocracy. Advantages of China’s political system Many factors have contributed to China’s startling economic rise. Free trade and globalization are unequivocally important drivers. However, many countries with a huge population or immense territory such as India, Russia and Indonesia have not been able to achieve the same economic growth as that of China, even though the same international environment and opportunities were availed to them. Many political pundits and economists have failed to recognize that what sets China apart from others in its development path is, in fact, its unique political system. China’s centralized CPC-led system has obvious advantages over electoral democracy as it allows the government to formulate long-term economic development plans for the country as opposed to focusing on short term populist policies for voters’ satisfaction. It is not uncommon for a new government to reverse development policies of the previous regime due to different ideologies in a parliamentary democracy. Meritocracy and political stability enhance government efficiency and accountability. China is well acknowledged for its high efficiency in delivering mega infrastructure projects. It builds highways, railways, bridges, dams, power plants, airports and other infrastructure projects in record time, now come to know as “China Speed”. Typically, a HSR project in China takes about 4 years to complete irrespective of its size, whilst in other countries, a similar project may take up to a decade to build. “China Speed” speeds up China’s economic growth as infrastructure is not only the prerequisite, but also the catalyst for economic development. BRI – a platform for international cooperation China’s Belt and Road Initiative (BRI) is the biggest infrastructure built out in the history of mankind. It is a mammoth transcontinental development project that aims to build connectivity across the Eurasian landmass based on the principles of mutual consultation, joint contribution and shared benefits. “China will actively promote international cooperation through the Belt and Road Initiative. In doing so, we hope to achieve policy, infrastructure, trade, financial, and people-to-people connectivity and thus build a new platform for international co-operation to create new drivers of shared development,” said President Xi Jinping at the 19th CPC National Congress. Sound infrastructures are the prerequisite for economic development. According to ADB’s estimate, Asia alone requires $26 trillion of infrastructure investment from 2016 to 2030 in order to maintain its growth momentum, eradicate poverty and respond to climate change. China is well positioned to contribute to the global infrastructure investment needs in view of its technology and expertise in building infrastructure projects, coupled with its huge pool of foreign reserves. To deepen its reform, China must move up the global value chain, migrate its low technology industries and alleviate its excess industrial capacities by opening-up new markets. BRI connects China’s landlocked northwest provinces to the world with overland highways and railways. It opens a safe passageway to the Indian Ocean through the China-Pakistan Economic Corridor. BRI is thus a win-win transnational development project benefiting China and the partner countries. However, in the eyes of Washington, BRI is China’s grand strategy to project its global influence and a challenge to America’s world supremacy. Washington accused China of coercive economic diplomacy by indiscriminate lending to developing countries with poor repayment ability, eventually seizing the strategic assets of the recipients when they failed to repay the loans – a scheme propagated by the West as “debt trap”. China is developing through interaction with the world China is a member of the global village. It is developing through interactions with the world. “China has been seeking development with its door open. China has embraced the world, learned from the world, and contributed to the world, through positive interaction and shared development.” China sums up its relationship with the world in “ China and the World in the New Era”, a White Paper commemorating the 70th Anniversary of the founding of the People’s Republic of China. China promotes interconnected development and benefits from the existing international order. It advocates free trade and multilateralism. When China started its reform and opening-up to the world, the West cast a mould, expecting China to grow accordingly. However, China took a path not traversed by others – a mixed economy under the centralized authoritarian system, or as CPC puts it, Socialism with Chinese Characteristics. It is a system rooted in thousands of years of its history and civilization, a development model that suits China and produces an economic miracle never seen in human history. The Belt and Road Initiative is China’s mega initiative for globalization aiming at win-win outcome. It is China’s offer of public goods to the world as an emerging economic superpower, a manifestation of its age-old philosophy, “When you are rich, share your wealth with the world (达则兼济天下）.” China is now the second largest economy and top trading nation in the world, contributing about 30 percent to global growth. Inevitably, the international order should reflect the new economic dynamics of the 21st century. While China’s economic achievements offer valuable lessons to the world, it has no messianic aspirations. As President Xi Jinping has categorically said, “We will not import other countries’ models, and will not export the China model.” China’s growth is being realized within the existing international order. China has no reason to sabotage it nor the intention to supplant America’s global preeminence. China’s rise is no threat to the liberal international order!

First, and at the most basic level, it is not obvious that the China threat is as draconian as neo-primacy allows. To be sure, China is a more capable competitor than the United States has faced in many decades (and perhaps ever). Even compared to the Soviet Union, China enjoys a more dynamic economy, is better integrated into international institutions, has a larger and more homogenous population, and is geographically closer to the arena of major strategic contestation. That said, China is in a less advantageous position to do much with the capabilities at its disposal. On one level, Beijing does not enjoy the power vacuums along its periphery enjoyed by the Soviet Union during the heyday of the USSR’s post-war growth. It remains hemmed in by geography while potential balancers such as Japan, India, and Australia all retain significant latent capabilities that could be devoted to defense; many such counter-balancers have given strong signals of their inclination to oppose Chinese aggrandizement. These points also interact, giving a defensive advantage to many of the states along China’s periphery and underlining that a Chinese quest for regional hegemony or sphere of influence can be opposed by states positioned to help frustrate Chinese ambitions. In essence, China is a threat, but it may not be the near-hegemon poised to ride roughshod over East Asia, cowing all local actors or carving off a sphere of influence, that neo-primacy assumes. By making more of the China threat than warranted, neo-primacy thereby risks creating a broader and deeper contest with Beijing than is warranted.

NONE OF this is meant to disparage the magnitude of the challenge from China. On the contrary, the U.S.-China competition is severe, structural, and systemic. China is challenging the United States’ post-Cold War status as the sole superpower, the wealthiest and most influential country in the world, and the putative leader of the international order. It is offering its governing model of authoritarian socialism as a viable alternative to democracy. And it is mobilizing its state sector to maximize every Chinese competitive advantage over the United States in trade and technology. But none of these challenges is existential or insuperable. Beijing is not seeking to eliminate U.S. power, wealth, and influence or to eradicate democracy and capitalism. Rather, it seeks a multipolar world in which China is also a “leader,” its interests are secure, and its governing model is accepted as legitimate. Even this vision, however, represents an extraordinary challenge to a United States whose political and economic models are stumbling, whose international reputation has eroded, and whose interests are not wholly secure. These vulnerabilities lend themselves to magnifying the China challenge into a zero-sum or winner-take-all contest in which neither side would find coexistence with the other system tolerable.

The historical context of these trends is important. The fact is that the United States, even before its recent domestic travails, was having more than its share of trouble acknowledging and adjusting to shifts in the global balance of power since the end of the Cold War, 9/11, and the global financial crisis. Whether or not one subscribes to the notion that the United States is in relative strategic decline, it clearly no longer is (if it ever was) a global hegemon that can set the terms of its engagement with the rest of the world at will. The United States no longer enjoys “primacy” either globally or in the Western Pacific, and this further amplifies the perceived threat from a more powerful and competitive China. The prevailing U.S. response to these new historical circumstances, however, seems to fluctuate between denial that U.S. primacy has been lost, and a tacit acceptance that it has—but with a determination to restore and sustain it, presumably into perpetuity. Perhaps the latter is possible, but only if America first gets its domestic house in order.

Though the tech continues to improve, there are still glaring problems with generative AI. Figuring out how to ensure models that are supposed to be reliable don’t generate false information has vexed researchers. At Google’s big cloud computing conference earlier this month, the company offered a new solution to the problem: Customers using its tech to train AI models could let their bots fact-check themselves by simply looking things up on Google Search.

Some claims about AI’s near-magic ability to do human-level tasks also have been called into question. A new paper from researchers at the University of Massachusetts at Amherst, Adobe, the Allen Institute for AI and Princeton showed that AI models routinely made factual mistakes and errors of omission when asked to summarize long documents. Another recent paper suggested that a claim that AI was better than the vast majority of humans at writing bar exams was exaggerated.

And that brings me back to Andreessen Horowitz, and the gall it takes to so frankly dismiss the rights of all creators as an inconvenient barrier to VC wealth. In its comments to the Copyright Office, a16z recited Psalm 1 from the Book of Tech-Bro, demanding our blind faith that what’s good for the tech sector is always good for the country. “[Investor] expectations have been a critical factor in the enormous investment of private capital into US-based AI companies. Undermining those expectations will jeopardize future investment, along with U.S. economic competitiveness and national security.”

After recovering from the spit take at manifesto-writing capitalists seeking federal protection for their private equity investments, the only sensible reply to the overstated reference to national security is BULLSHIT. If the future of U.S. national security depends on developing a for-profit generative AI to make music or paint pictures, we’re screwed. Fortunately, this is not the case. Defense Department AI strategy (good, bad, or otherwise) will proceed independent of AI’s role in creative works of expression. Accordingly, it is both revealing and ridiculous that Andreesen Horowitz would even mention national security in comments to the Copyright Office.

Followers of high finance are familiar with the old principle of privatizing profits and socializing losses — that is, treating the former as the rightful property of investors and shareholders while sticking the public with the latter. It’s the principle that gave us taxpayer bailouts of big banks and the auto companies during the last recession.

Investors in artificial intelligence are taking the idea one step further in fighting against lawsuits filed by artists and writers asserting that the AI development process involves copyright infringement on a massive scale.

If the AI companies need to compensate the millions of authors whose work they’re using, that could “kill or significantly hamper” the entire technology, according to a filing with the U.S. Copyright Office from the major venture-capital firm Andreessen Horowitz, which has a number of significant investments in generative AI. Current models might have to be scrapped and new ones trained on open or properly licensed sources. The cost could be significant, and the new models might be less fluent.

Yet, although it would set generative AI back in the short term, a responsible rebuild could also improve the technology’s standing in the eyes of many whose work has been used without permission, and who hear the promise of AI that “benefits all of humanity” as mere self-serving cant. A moment of reckoning approaches for one of the most disruptive technologies in history.

OpenAI, the start-up behind ChatGPT, signed a licensing deal on Monday (29 April) with the Financial Times (FT) allowing it access to archived features and news articles.

The FT’s articles will be used as training data for OpenAI's GenAI chatbot, allowing it to answer prompts using data from the articles. Any article mentioned in ChatGPT’s response will be linked so its user can easily view the source material.

Artificial intelligence is headed toward a litigation iceberg of copyright complaints, which could sink development of this nascent technology. Actors and writers have expressed fears over AI integration in the entertainment sector, and some are pointing to AI’s supposed copyright violations as a fear factor. Now, the news media is trying to get their swing at the AI piñata, with The New York Times’ new lawsuit first in line.

Before New Years, the Times filed a lawsuit against OpenAI and Microsoft, alleging the unauthorized use of its content to train AI tools. This complaint echoes the failed legal theory presented in Sarah Silverman’s recently decided copyright suit against Meta’s AI, LlaMA.

As with any hype cycle, the huge leaps forward in AI capabilities in recent months have whetted VC appetites. And after OpenAI served up its latest dose of catnip last week, the frenzy is even greater.

But people who’ve built long careers in AI are now worrying about the collateral damage from too much indiscriminate cash being splashed by VCs. Some warn we’re also heading for mass startup failures as a slew of generic “AI startups” pop up in response to VCs’ new obsession, despite the value that generative AI could bring to society.

Runaway confidence in artificial intelligence risks repeating the mistakes of the crypto hype bubble of only two years ago, economics professor and Nobel laureate Paul Romer warned.

“Right now, there’s way too much confidence about the future trajectory of AI,” Romer told Bloomberg TV at the UBS Asian Investment Conference in Hong Kong on Wednesday. “When people project this forward, I think they’re at risk of making a very serious mistake.”

As investors pour billions of dollars into the AI frenzy, analysts are starting to become wary of an "AI bubble" that could leave investors out to dry.

In a research note spotted by CNBC, tech stock analyst Richard Windsor used a colorful metaphor to describe what would happen if such a bubble were to burst.

SAN FRANCISCO — In June, Inflection AI was riding high. The artificial intelligence start-up founded by veterans of Google’s famous DeepMind AI lab had just raised $1.3 billion from Microsoft and tech billionaires Bill Gates, Reid Hoffman and Eric Schmidt to build out its chatbot business.

But less than a year later, the tide has turned. Co-founders Mustafa Suleyman and Karén Simonyan have left Inflection AI for jobs at Microsoft, which now has the rights to use its technology. Inflection AI is now focused on helping other companies improve their AI tools.

China will press ahead this year with development of large language models (LLMs) – the technology used to train ChatGPT and similar applications – and generative artificial intelligence (AI) systems, despite restrictions imposed by the United States on the mainland’s access to advanced semiconductors, according to analysts from Swiss investment bank UBS.

China is expected to “work within those constraints and try to make progress” by tapping into domestic AI accelerator programmes and being more economical in using computing resources, said Nicolas Gaudois, head of Asia-Pacific technology research at UBS, during a webinar hosted by the bank on Tuesday.

When it comes to global competition, according to Chinese leader Xi Jinping, “technological innovation has become the main battleground.” In 2015, Beijing announced its Made in China 2025 plan, a policy that aimed to transform China into a high-tech manufacturing powerhouse and reduce its dependence on foreign technology and imports. China has also introduced the Digital Silk Road, a program in which Chinese infrastructure investment is linked to recipient countries’ adoption of Chinese technologies, as part of its Belt and Road Initiative. At the Belt and Road Forum in Beijing in October, Xi announced a new AI governance program and reiterated his support for international cooperation on science and technology.

In some ways, the United States is mirroring China’s plans. Washington aims to accelerate innovation and stay as far ahead of Beijing as possible on artificial intelligence capabilities and advanced semiconductors. To spur domestic innovation and manufacturing, the 2022 CHIPS and Science Act committed $52.7 billion in U.S. semiconductor research, development, manufacturing, and workforce training. And in its tech policies abroad, the United States is taking what the government calls a “small yard, high fence” approach, using export controls and similar tools to limit the ability of Chinese companies to use foundational technologies such as AI chips and semiconductor equipment. In October, the United States upped the ante by closing gaps in a previous set of export controls, expanding licensing requirements, and subjecting additional Chinese companies to trade restrictions, tightening a policy that China had already referred to as a “technology blockade.”

Artificial intelligence specialists warned the Defense Department on Thursday that China has caught up in the AI arms race and has even pulled ahead of America in some areas.

The AI experts, who are working closely with the Pentagon, cautioned those attending a government-organized symposium on AI against overestimating America’s advantage in its high-tech competition with China.

University of Oxford economist Max Roser has pointed out that the number of people in extreme poverty has fallen by roughly 137,000 individuals every single day for the past 25 years. That’s over a billion people—more people than there were on Earth just a couple centuries ago.

This miraculous occurrence has been called “the most important fact about wellbeing in the world since World War II” by the Nobel Prize winning Princeton University economist Angus Deaton in his book The Great Escape. And as CNN host and Washington Post columnist Fareed Zakaria has observed, these data indicate that more people have escaped extreme poverty in the last fifty years than had done so in the preceding five hundred.

Some leftist economists like Mariana Mazzucato argue that governments might be able to step in and become laboratories for innovation. But that would be a historical anomaly; socialist-leaning governments have typically been less innovative than others. After all, bureaucrats and worker-corporate boards have little incentive to upset the status quo or compete to build a better widget. And even when government programs have spurred innovation—as in the case of the internet—it took the private sector to recognize the value and create a market.

And that brings us to a third reason to believe in markets: productivity. Some economists, such as Robert Gordon, have looked to today’s economic problems and suggested that productivity growth—the engine that fueled so much of the progress of the last several decades—is over. In this telling, the resources, products, and systems that underpin the world’s economy are all optimized, and little further progress is possible.