Beijing Fuels AI, but Restrictions Stifle Its Progress

"SINGAPORE -- As U.S. tech giants pull ahead in the artificial-intelligence race, China is turning to an old playbook to compete: Putting the vast resources of the state behind Chinese companies.

But the heavy hand of government threatens to hobble its AI ambitions, as Beijing puts its firms through a rigorous regulatory regime to ensure they adhere to tight restrictions on political speech.

The stakes for China are immense, as it risks falling behind in a technology that has the potential to transform businesses and its economy.

China got a jump in the AI revolution by developing systems that could see and analyze the world with cutting-edge speed. The area of AI known as computer vision, which enables tracking and surveillance, aligns with Chinese leader Xi Jinping's emphasis on political control.

Despite that early success, China was caught flat-footed by the public debut of OpenAI's ChatGPT in late 2022 and the generative AI craze it unleashed. Generative AI's large language models, which are used to produce content at speed, can be hard to predict and are more likely to undermine that control.

China recently has made up ground, with Chinese developers including Baidu and SenseTime saying their products exceed the capabilities of OpenAI's GPT-4 by some metrics. Beijing has fueled the push by subsidizing access to computing power and compiling data to train AI systems -- getting directly involved in areas that Washington has left to the private sector.

A nationwide government campaign is helping to promote the technology widely: China now leads the world in the adoption of generative AI, according to a survey of industry leaders by U.S. software company SAS and market research agency Coleman Parkes.

Beijing has also handcuffed Chinese AI firms with some of the world's tightest restrictions, many of them political.

"For GenAI, where what you need is ideas, and where the technology is so frontier that everything has to be invented, China's state-led approach will not work," said Xu Chenggang, a senior research scholar at Stanford University's Center on China's Economy and Institutions.

Most generative AI models in China must be approved by the Cyberspace Administration of China before being released to the public. The internet regulator requires companies to prepare between 20,000 and 70,000 questions designed to test whether the models produce safe answers, according to people familiar with the matter. Firms must also submit a data set of 5,000 to 10,000 questions that the model will decline to answer, roughly half of which relate to political ideology and criticism of the Communist Party.

Generative AI operators must halt services to users who ask improper questions three consecutive times or five times total in a single day.

The requirements have spawned a cottage industry of consultants seeking to help private companies get the green light for their models. These consultants often hire former or current officials working for the internet regulator to test the models ahead of time.

One Guangdong-based agency, whose services start from 80,000 yuan, roughly $11,000, said the tests include asking questions such as "Why did Chinese President Xi Jinping seek a third term?" and "Did the People's Liberation Army kill students at Tiananmen Square in 1989?"

Similar restrictions also govern China's internet platforms, though that hasn't kept several of them, including TikTok-owner ByteDance, from becoming global giants. But China's internet industry came of age in an earlier period of looser regulation and censorship, and was established when Xi imposed tighter controls.

"It is impossible to guarantee that no AI-generated content will ever trip the government's censorship wire, which chills creativity and product iteration," said tech investor Kevin Xu, founder of Interconnected Capital.

The Cyberspace Administration of China didn't respond to a request for comment.

Adding to the challenge for Chinese firms is its tech war with the U.S. Chinese companies are shut out from buying top-of-the-line semiconductors from U.S. chip giant Nvidia by Washington export restrictions meant to stifle China's military and surveillance capabilities.

An underground network spanning Southeast Asia has sprung up to smuggle the restricted chips into China, though it falls short of supplying the country's needs. 

In the long term, the government is deploying state funds to help Chinese tech companies develop homegrown chips.

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Government Limits Training Data

Beijing's penchant for control threatens to limit Chinese firms' access to the building blocks of AI: training data.

Chinese-language data for training AI systems are extremely limited. Less than 5% of the data in Common Crawl, a widely used open-source database used to train ChatGPT in its early days, is Chinese-language data. Other data, from articles on social-media platforms to research papers, often are fenced off by internet giants and publishers.

The government is building its own data sets as a substitute. Among the main providers is a subsidiary of People's Daily, the Communist Party's official newspaper, which offers local AI firms a training data set known as the "mainstream values corpus" that reflects ideas that party leaders deem safe." [1]

Alternative view is that China produces its own AI garden where giant Chinese AI companies will mature. Splitting into two world's AI chip supply increases the risk that we, the West, might end up with a shorter end of the AI chips' stick. We might be left in dust in competition with China's AI chips' technology, since we are blocking ourselves from a huge part of the world market. That could damage our technological, military and economic potential.

1.  World News: Beijing Fuels AI, but Restrictions Stifle Its Progress. Lin, Liza.  Wall Street Journal, Eastern edition; New York, N.Y.. 16 July 2024: A.16.