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Quantity doesn’t matter. Originality and Uniqueness are best benchmarks.

Xiang 23 (Nina Xiang is managing director at TH Capital, an investment advisory and asset management firm. She is the author of "US-China Tech War: What Chinese Tech History Reveals About Future Tech Rivalry.”) “Chinese AI is not the threat the U.S. thinks it is” November 10, 2023 https://asia.nikkei.com/Opinion/Chinese-AI-is-not-the-threat-the-U.S.-thinks-it-is // ZX

It is high time for the world to realize that China is not becoming the artificial intelligence superpower that many have feared.

ChatGPT came from the U.S., not China. Despite an official goal of leading the world in AI by 2030, Chinese technology companies are struggling to catch up with their U.S. counterparts. It is a safe bet that foreseeable groundbreaking AI innovations will not come from China either.

This should not be a big surprise. Chinese President Xi Jinping's self-destructive policies have chipped away at the economic, civil and social freedoms crucial for fostering innovation.

Some of China's shortcomings are tied to external factors. The deepening decoupling between the American and Chinese technology ecosystems will increasingly threaten the ability of Chinese companies to secure the computing power critical to advances in AI.

What this means is that the U.S. should no longer frame the two countries' dynamic in pioneering AI technologies as a close race. China is unlikely to be a challenger to U.S. tech supremacy for a long time.

Hype has mounted around China's AI capabilities from various directions. It is frequently highlighted that China has filed more than half the world's AI patent applications and that Chinese researchers are the leading producers of published AI research.

According to the China Academy of Information and Communications Technology, a state body, China accounted for 24.7% of AI startups globally in 2020, second only to the 38.3% share of the U.S.

But technological innovation, especially in AI, is not a linear process nor is it evenly distributed. The impact of ChatGPT has been greater than that of the combined output of thousands of Chinese AI startups.

This kind of disruptive innovation has played out in history repeatedly. The introduction of the iPhone in 2007 revolutionized mobile computing and led to the app-based economy. The creation of deep neural networks like AlexNet in 2012 marked a turning point that led to the current wave of AI advances.

Due to the nature of China's political system, the country lacks the ability to provide a consistent and conducive environment for producing disruptive innovations. Moreover, personal freedom to express ideas and economic freedom for business to operate without government interference have significantly deteriorated under Xi.

Those who argue that China is threatening U.S. supremacy in AI fail to recognize that the benchmarks they are referencing are not that significant. A large quantity of ideas does not guarantee the presence of any truly transformative innovations. It is the quality and originality of ideas that matters.

Yet Xi's crackdown on private tech companies has instilled a culture of fear, hindering free expression and the entrepreneurial spirit. Chinese companies that worked to develop their own alternatives to ChatGPT could not offer them for even test use by the public without government approval due to fears the systems might generate politically provocative answers.

In August, Beijing finally authorized the public release of generative AI services from eight major Chinese tech companies. But these ChatGPT copycats are heavily censored and do not really bring any significant advances over U.S. counterparts, which continue to become more sophisticated.

ChatGPT, for example, continues to add new features and now can interact with user input in the form of text, audio or images and can be customized by users wanting to create their own GPT, or generative pre-trained transformer. Meanwhile, Baidu's Ernie Bot is still trying to catch up with features added in previous updates of ChatGPT.

In China's present environment, it is hard for companies to make long-term plans and investments, attract and retain talent, and comply with erratic regulation. The effect of these harshening conditions can be seen in the sinking market capitalization of major Chinese tech companies.

At the start of 2021, Tencent Holdings, Alibaba Group and Meituan had a combined market capitalization of more than $2 trillion, or close to half that of their three closest U.S. peers. Now the collective market cap of the Chinese trio is $655 billion, less than a tenth of that of their U.S. counterparts.

The rise of Chinese technology companies was facilitated by their integration into the global tech ecosystem. This included capital inflows and spillover from U.S. investors and talent. However, decoupling is making it increasingly challenging for Chinese tech companies to play catch-up. The tightening of U.S. export controls will make it hard for Chinese companies to secure the advanced chips they need to simply reproduce new AI technologies coming out of the U.S. Washington is also moving to restrict American investments in Chinese AI companies.

At this point, the U.S. should pivot from containing Chinese AI capabilities to diversifying its own advanced technology supply chains. China will not be able to challenge the U.S. in AI in many aspects -- from breakthroughs in new AI models like transfer learning to innovative applications like brain-computer interfaces.

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