American AI Initiative: How Will It Affect China and the US

The Trump administration finally struck back.

As early as in 2016, the Obama administration had issued a few reports about the future of artificial intelligence, and countries and regions such as China, Canada, Japan and Europe are issuing their national AI strategies, the Trump government, however, remained silent since he was sworn in.

This is why the executive order, the American AI Initiative, signed by president Trump on February 11th came out as a surprise. In all, it’s a positive sign shows that America has recognized the importance of artificial intelligence, and is ready to make it one of the technology priorities.

How will the initiative affect the manufacturing industry in both China and the US? What areas should we pay extra attention to with the new initiative coming up?

1. What is the American AI Initiative About

In all, the American AI Initiative aims at allocating more federal investments and resources to the AI industry. It calls for the US’s lead in setting out standards for the international AI industry and re-train American labor forces to better keep up with the AI era. To break them down, the initiative covers the following five areas:

1.1 Research and development

The federal organizations are required to prioritize the investment o AI and report how the funds are used. So the government can have a more comprehensive view of AI investment.

1.2 Re-allocate resources

The federal government’s data, algorithm and processing power will lean over to more researchers so as to drive the development of the traffic and medical industries.

1.3 Set up moral standards

The White House Technology Office, together with other federal agencies, will be required to set up standards that can guide the development of a “reliable, stable, trustworthy, safe, simple and coordinating AI system”.

1.4 Automation

All organizations are required to set up scholarship and apprenticeship so the employees can be ready for the upcoming changes in the job market.

1.5 International cooperation

The US government would like to see cooperation in the AI field between the US and the other countries, but the “values and benefits” of the US must remain intact.

2. The AI industry situations in America and China

2.1 Why the American AI Initiative, why now

From the report issued by the World Intellectual Property Organization on January 31, 2019, China and America have applied for more patents and issued more research papers than any other countries, which indicates the leading role of these two countries.

In addition, a report issued by Tsinghua University last year points out that America has attracted more investment than the other countries in the AI field, but China has a wider investment raising range.

Moreover, China raised 25 billion dollars, while the overall investment in the AI industry was 40 billion in 2017.

This is part of the reason why Trump administration launches the American AI initiative, as a way to take control of the advanced technology: The rapid development of China’s technology, especially in the AI field, is pressuring America to do something. To some extent, America is shifting from solving the trading tariff deficits to protecting its intellectual properties and technologies.

2.2 The AI industries in America and China now

On the side note, even though China is also regarded as America’s strong competitor, its disadvantages are also very obvious: it doesn’t have a mature supply chain for high-end products such as microchips and CPU. Not to mention that China lacks skilled experts and professionals, and intelligent hardware to drive the development of its AI industry.

Apart from the above factors, there are more areas that deserve our attention:

  • Patents. Over the years, patents applied by China, despite its large quantity, are usually of low quality.
  • Industrial strength. The AI industry in America is a fast launcher and a steady grower, with the growing speed in recent years increased by a noticeable margin. While China is more a late-comer, and the AI industry doesn’t pick up its speed until 2010.
  • International IP protection. Despite the huge market potential, China has yet to be aware of the importance of technology protection and its layout on the global market. This might hurt the international entry of China in the future.
  • Technology focus. America focuses more on the applications of AI technologies in advanced areas such as self-driving vehicles, while China is more on the traditional industries.

3. What opportunities does China have?

That being said, the future of the AI industry remains bright for China, thanks to the government support and urgent market needs.

To be more exact, in the long run, the following 3 factors will be the main drivers for the AI industry in China:

  • The wide user base in China means a huge market with great potential;
  • The data footprints from the large users base: More data footprints mean easier development for the industry;
  • Even though there are yet enough professionals in the field, there are many universities and institutions that are cultivating the right experts for the industry, and more professionals and the talented from overseas help to accelerate the process.

4. What can China do with the opportunities?

From the investment and development layouts of these two countries, it’s not hard to know that the to catch up with America, China needs to work really hard on the innovationtop-notch design and AI algorithm and chips fronts. Furthermore, lacking quality semiconductor suppliers, China still relies heavily on processed chips provided by foreign suppliers.

These areas could take quite some time to develop and grow, and at the moment, it’s too early to say that China can stand on its own to compete with America. In all, it is an uphill battle.

4.1 Develop semiconductor and chip suppliers

As mentioned, the weak semiconductor suppliers have become the bottleneck for the AI industry in China.

To be more exact, in 2015, the semiconductors produced in China account for only 4% of the global market share, while America produced 50% of the semiconductors required.

Without strong semiconductor suppliers, there will be no strong chip suppliers. This is why American chip giants such as Nvidia, Intel, and AMD are occupying a large market share in China.

On the other hand, the startup chip companies in China are not making it easier for the AI industry to thrive: They develop their own systems and software packs, which can’t fit into the more flexible environment built by Nvidia or Google, or compete with them.

Therefore, it’s utmost important for the hardware manufacturers to either fit into a bio circle to keep up with the giants, or find its unique niche market that has great potential.

4.2 Make good use of the data

In the American AI Initiative, the administration encourages data access by AI companies so as to help with the AI model training and drive the industry development. But American citizens are highly altered on their personal data, so this could be quite a problem. And data is the fuel for the AI industry. Without a large quantity of data, there is not much you can do.

China is a different case. With the large user base and market, we’ve completed the first step, and just need more creativity and innovation to put the data into good use.

4.3 Business

The AI industry nowadays is at the application stage, and it requires more than just the technical capabilities to make it perfect. Support from the government and private entities, as well as that from customers, need to work together to build an enabling environment. Therefore, project effectiveness and efficiency play a key role in earning market shares for AI businesses.

5. Conclusion

Back in 2017, the Chinese government already launched the national AI initiative, which makes America 2 years behind. Moreover, the American AI initiative signed days ago doesn’t specify the source of the funds, not does it have the endorsement from enough scholars and civic leaders, such factors really make people wonder how far it can go.

China is facing quite some severe challenges in the AI industry, but with proper support from all sides, we’re still optimistic about its future.

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