AI Futures: China or the West?

One question I was asked on my recent trip to China was:

We are on the cusp of the fourth industrial revolution. The first three were powered by technologies developed in Britain and America. Will that be true of the fourth or will Chinese technology be the driving force?

Setting aside what this tells us about the current political narrative around technology in China, it is an interesting question in itself which is worth reflecting on. So I am going to write up in a little more detail the answer I gave.

What are the ingredients for AI?

Effective AI needs four things:¹

1. Data. Masses of data.
2. Very smart people to fine-tune the algorithms, which is basically just maths.
3. 'Compute', which is the conjunction of fast chips, cheap energy and plentiful water.
4. Governance to realise the benefits and mitigate the harms.

Data

In the West, AI development is already running out of data. Anyone with access to data is changing their privacy policies to exploit it, but there still isn't enough and some models are now being trained on synthetic data. In contrast, China has vast reserves of data, from WeChat to state surveillance, which is easy to exploit.

Smart people

While the period of encouraging academic interchange with the West seems to be coming to an end, that is precisely because the strategy has paid off and they are now training the brightest minds themselves. Chinese higher education has pretty much caught up with the West.

Compute

The energy² and water is not a problem for China, but the chips may be. Western AI depends on hyperscale data centres running NVidia GPUs. With US export bans in place, China is working hard to produce alternatives of similar power. I am sure they will, so the real question is how quickly.

Governance

It is easy to overlook the importance of a governance model for turning a productive technology into an 'industrial revolution'. For the first three, the governance model was laissez-faire capitalism and the West is relying on that again for the fourth. That may be a mistake. A technology that increases productivity and thus reduces labour costs may look like an unassailable benefit, but the business will fold if there are not enough people with enough money to buy the product. The short-term narrow thinking of capitalism needs governance to avoid systemic effects which undermine the economy as a whole.

This is exacerbated by two features of the current situation in the West: a 'move fast and break things' approach backed by investors looking for massive windfall profits. The laissez-faire approach worked when business owners taking advantage of the new technologies were looking for sustainable growth rather than quick wins. Neoliberal capitalism may be at risk of eating its own tail if it pursues the #AIHype without better governance.

China has a governance model with its eye on the long-term and the overall economic picture, plus the state power to enforce it. This may be the decisive advantage in the fourth industrial revolution, which arrives in a world where extremes of inequality - and the effects of climate change - are reaching the tipping point at which they will undermine the very patterns of consumption which keeps the current global economy afloat.