(THIS ARTICLE IS MACHINE TRANSLATED by Google from Norwegian)
In the future, if not already, the Silicon Valley artificial intelligence (AI) centers will be located in China. High-tech companies Xiaomi, Baidu, Didi Chuxing, Meituan and Toutiao all have their headquarters in Beijing. Alibaba, China's e-commerce giant, is located in Hangzou. And Tencent, a multinational conglomerate that invests heavily in AI, is located in Shenzhen. Tencent already has a market value higher than General Electrics, and Baidu is larger than General Motors.
China has the opportunity to take a leading position in AI because it has been able to adopt new technology very quickly. As millions of consumers in India went directly from no phone to smartphone – and dropped landline and flip phone on the way there – Chinese consumers are now doing the same, and with a host of new technologies. For example, Chinese customers have dropped credit cards and gone straight to using e-payment platforms. While Apple Pay struggles to break through in the US, Tencent is already used to over 600 million cash-free transactions every day.
No culture for privacy
Tencent and other Chinese companies' highly centralized platforms provide these with an advantage in research and development of AI, through the ability to collect large amounts of data that can then be used to train the machine learning algorithms. These platforms also have virtually monopoly power, which will increase earnings on future AI applications.
Chinese companies also have an advantage when it comes to cultural norms relating to privacy. In the West, privacy is considered a personal right to have their "own space", and in a slightly wider sense, to "own" their own data. This notion of privacy is good for the individual, and, one might argue, for the community – but for AI developers it is not so good, since such a mentality will hinder the pursuit of data needed to train the algorithms.
In Chinese culture, privacy is viewed with suspicion – as a form of secrecy. One assumes that an honest person has nothing to hide from the general public – so Chinese consumers often find it perfectly okay to disclose their personal data. Unlike India, where the country's supreme court has upheld the right to privacy as a fundamental right, and the EU, which has legalized "the right to be forgotten", there has been no serious discussion of privacy and data in China.
This fits Chinese technology companies well. The legal framework in China allows such companies to collect a wide range of user data for a variety of purposes, such as creating social evaluation systems, such as Alibaba's Sesame Credit.
Several obstacles in the way
Still: Limited funding and investment opportunities both at home and abroad can slow China's progress in AI and related fields. Chinese savers have few incentives to put their money into the country's own banks, as the inflation rate is higher than the real yield on deposits. And given China's volatile consumer prices, many are reluctant to lock in the savings for a long time.
In Chinese culture, privacy is viewed with suspicion – as a form of secrecy.
Furthermore, there is little reason to invest in the Shanghai Stock Exchange as long as economic growth is systematically higher than the return on the stock market. And investors are anxious for a repeat of the crisis in 2015, as market turbulence led to sharply falling prices and several stops in stock trading – and that the government saw itself forced to intervene. The authorities managed to stabilize prices, but this was done by increasing incentives for stockbrokers and prohibiting short sales and sale of shares over a certain limit.
A third problem is that a steady rise in house prices has made investments in all risk values even more risky. Zhou Xiaochuan, the head of the People's Bank of China, now warns against a "Minsky moment" as China's home-run household debt could lead to a sudden drop in property prices.
Chinese companies also face limited opportunities to invest abroad. In addition to the Chinese government's own capital controls, the US government has considered tighter restrictions on Chinese investment in strategically important sectors, particularly those related to AI and machine learning. In fact, US regulations recently blocked Alibaba's attempt to acquire MoneyGram by referring to national security concerns.
Will create dilemmas
The prospect of a China-led AI revolution presents both opportunities and challenges. From the West's point of view, it could allow for increased cooperation with one of the world's most dynamic economies. And that could bring China deeper into the fold of the rule-based international order.
But at the same time, China's AI leadership is likely to cause more clashes between Chinese companies and foreign regulations. China's tech giants are ex-
is pandering internationally, and their approach to data collection and privacy will create dilemmas for other countries. The challenge will be to dare to do business with an illiberal state without missing out on Chinese investments and innovations.
