The New AI Cold War Between China and the USA

The Cold War between the United States and Russia ended in 1991. However, considering the ‘behind the scenes’ behavior of the world’s two current Super Powers – China and the USA, another might just be beginning.

This time around, many believe that the real battle doesn’t relate to the trade deficit between the two countries, despite new stories detailing the escalation of trade tariffs. In the next decade and a half, the real battle will take place between China and the USA in the technology arena, specifically, in the area of Artificial Intelligence or AI.

China’s not shy about it’s AI ambitions

China has made clear its goals when it comes to AI. It has publicly announced its plan to be the world leader in Artificial Intelligence by 2030. The country has learned a hard lesson, missing out on previous tech booms, notably, in the race for internet supremacy early this century.

Now, they are taking a far more proactive stance. The AI market is estimated to be worth $150 billion per year by 2030, slightly over a decade from now, and China has made very clear public statements that the country wants it all.

The US, in contrast has a number of private companies striving to carve out a leadership position in AI but no holistic policy. Quite the contrary, in fact. Trumps government say, “There is no need for an AI moonshot, and that minimizing government interference is the best way to make sure the technology flourishes.”

What makes China so dangerous as an AI Threat ?

China’s background and current circumstance gives them a set of valuable strategic advantages when it comes to AI.

AI solutions are based, primarily, on two things. First, of critical importance is the amount of data available to ‘train’ an AI algorithm and the relative ease or difficulty of obtaining access to it. Secondly, the algorithm which sorts the data, looking for patterns and insights, derived from research, which are used to optimize the AI tools which interpret it. China leads the world on both fronts.

China has more data: China’s population is 4 times larger than the US’s giving them a massive data advantage. China has a total of 730 million daily internet users and 704 million smartphone mobile internet users. Each of the connected individuals uses their phone, laptop or tablet online each day. Those digital interactions leave logs of location, time, action performed and many other variables. In sum then, China’s huge population is constantly generating valuable data which can be mined for value.

Chinese regulations give public and private agencies easier access to this data: Few countries have exemplary records when it comes to human rights. Both Australia, and the US, for example, have been rebuked by the UN for their treatment of immigration in recent years. Questions have been asked of China too.

Some suggest that China’s centralized government, and alleged somewhat shady history when it comes to human rights means they can provide internet companies with more data, more easily, than their private equivalents in the US could dream of. Chinese cybersecurity laws require companies doing business in the country to store their data locally. The government has placed one state representative on the board of each of their major tech companies, giving them direct, unfettered central government influence in the strategic direction and intent of those companies, especially when it comes to coordinating the distribution of the data they obtain.

In the US, data leakage is one of the most prominent news stories of 2018. Given Facebook’s presentation to congress around the Facebook/Cambridge Analytica data sharing scandal, it would be hard to claim that US companies have access to data outside each company competing to evolve AI solutions fastest.

It’s more secretive: China protects its advantage by limiting other countries’ access to its findings / information related to AI. At the same time, China takes advantage of the open publication of cutting edge ideas generated by scientists in other areas of the world.

How China is doubling down on their natural advantage in AI solution development

A number of metrics show China’s growing advantage in the area. China is investing more money in the area and leading the world in the number of university led research papers on AI that they’re publishing.

China is investing more money in AI than the USA. They overtook the US in AI funds allocation in 2015 and have been increasing investment in the area since.

Source: Wall Street Journal

China now performs more research in to AI than the US – as measured by the number of published scientific peer reviewed journals.

Source: HBR

Why ‘Network Effects’ will decide the ultimate winner in the AI Arms Race

You won’t see evidence of a Cold War in the behaviors of World Leaders. The handshakes are firm and the visits are cordial. Everybody smiles when they meet at the G8. However, a look behind the curtain clearly shows a 21st Century arms race underway, being led by investments  related to AI in both countries.

Network effects ensure that there is often only one winner in a fight for technological supremacy. Whoever has the ‘best product’ for a given application, wins the most users. The data obtained from those users’ interactions with the tool is used to hone its performance. Thus creating a virtuous circle.

The result is evident in almost every sphere of tech: Network effects explain why most people use only Google, why there’s only one Facebook and how Netflix has overtaken cable TV in the US as the primary source of video entertainment. Ultimately, there is likely to be only one winner in the war surrounding AI, too.

From a military perspective, the advantage China has in its starting point for AI solution development could be the deciding factor. As we’ve seen, China has more people, with more devices, generating more data. That is likely to help the country develop workable AI solutions faster. They ingest the hard won advantages that US data scientists develop and share – but do not share their own. Finally, they simply outspend and out-research the US, investing more in AI than any other country. China’s coordinated approach outpaces the US’s market based solution with every step.

The country with the best AI solutions for each application will gain a ‘Winner Takes All’ advantage and the winning hand in the $300 billion game of AI market ownership.

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