Kai-Fu Lee: China Becoming an AI Superpower

How will AI change China’s manufacturing industry? Where else will it be used? Are China and the U.S. rivals in the area of AI? What happens when people use these advancements?

The Two Sessions, China’s annual political meetings of the National People’s Congress – the country’s highest organ of state power – and the National Committee of the Chinese People’s Political Consultative Conference – the country’s top political advisory body – are nearly half-way through. The sessions, which direct China’s plan for 2019, may be a domestic meeting, but the decisions made impact the entire world.

One area that will be discussed is how to continue implementation of Made in China 2025 in a better way. The flagship masterplan, announced in May 2015, guides the country’s advanced industrial manufacturing, has seen steady progress in industrial capability, smart manufacturing such as artificial intelligence (AI), innovation, product quality and branding.

Industrial robots move production material in a factory of Wenzhou Ruiming Industrial Co Ltd in Ruian. (Photo/Xinhua)

The State Council of China issued The Development Plan of the New Generation Artificial Intelligence on July 20, 2017 to seize the significant strategic opportunity of artificial intelligence development and to have the first-mover advantages of artificial intelligence in China. The plan is a major step for carrying out the innovation-driven development strategy.

How will AI change China’s manufacturing industry? Where else will it be used? Are China and the U.S. rivals in the area of AI? What happens when people use these advancements?

An artificial intelligence-powered robot welcomes a customer in the Xiangyang branch of Ping An Bank in Xiangyang, Hubei province. (Photo/China Daily)

These are all questions China Focus put to Kai-Fu Lee Chairman & CEO, Sinovation Ventures.

China Focus: What advantages does China have in developing AI?

Kai-Fu Lee: I think China simultaneously has a large market and extremely rich data resources, tenacious entrepreneurs and lots of good VCs (venture capitalists) with lots of money. China has a lot more data which allows the entrepreneurs to build valuable applications using AI to optimize these applications.

A deliveryman for Meituan-Dianping, China’s largest on-demand service platform, delivers food in Beijing. (Photo/China Daily)

For example, a company like Meituan in China, they do food delivery, which doesn’t sound like AI but once you deploy and have a lot of users, you actually realize you need AI to understand and figure out what people want to eat right that evening.

Through accumulative data collection and computation over time, they could reduce the cost of delivery to 70 cents per delivery. That allows an Internet company, not an AI company, to use AI to maximize profit, minimize delivery costs and all of a sudden with a large amount of data become a super unicorn. They will be worth, I think, $50 billion when they go public, much more than the U.S. Yelp or Groupon.

Equally important are entrepreneurs who can find the so-called product-market fit. In Europe, people think of the U.S. as hardworking and tenacious, in the east coast or the midwest of the U.S., people think of Silicon Valley as hardworking and tenacious, but compared to Silicon Valley, China is much more hardworking and tenacious.

The typical start-up company is either 9/9/6 or 9/9/7, which means 9 a.m.-9 p.m., six days a week or seven days a week. I think Chinese entrepreneurs are extremely hungry for success for many reasons, one being that because China has been a developing country,  there are many entrepreneurs that have been poor for 10 or 20 generations and family expectations and their own desire to prove themselves are tremendous.

Luohu district in Shenzhen, which used to be a poor village, is now a flourishing residential area with modern apartment buildings. (Photo/China Daily)

Jack Ma is a great role model because not only is he successful, charismatic and a great speaker, but also, because he came from humble beginnings. He couldn’t even get a job at KFC after college, so other entrepreneurs feel like this is a once in a 20-generation opportunity for them to make it and potentially help their families get out of poverty. If Jack Ma can do it, they feel they should at least have a shot.

China FocusHow is AI being used in China?

Kai-Fu Lee:Health care is the most important, and I think universally agreed upon, use of AI. It is to be used as a tool to help with radiology, X-rays, MRIs, CTs, or pathology, considering patient history, determining what the scans and exams and blood tests might represent.

People use an AI-powered robot to check in at a hospital in Guangzhou, South China’s Guangdong Province on April 3, 2017. (Photo: VCG)

In the future, it could also help with diagnoses, the probability of conditions and past treatments and outcomes leading to new symptoms and diagnoses, and various treatments available and the likelihood of success.

Each doctor treats about 10,000 patients in his or her lifetime, while also building on the 1,000 papers and 500 books that they read. But an AI device can be trained on a billion people and their medical records, and it can be amassing all of the knowledge that each doctor has into a giant database.

AI can learn all the latest treatments. Even the best doctors cannot read all the papers written or be aware of all clinical trials done, thus patients may miss opportunities to use a new drug or a clinical trial.

A patient gets help from a robot receptionist at the General Hospital of the People’s Liberation Army in Beijing. (Photo/Global Times)

In the future, medicine will become personalized, so that each person may get a different treatment.

When you open Facebook, everybody looks at a different news feed, we don’t all see the same news feed. But when you treat cancer, most people get a standard treatment, overlooking the possible alternate options.

But imagine, just like each of us may want to read a different news feed, each of us may have a different type of treatment that is maximally effective.

China Focus:Is China catching up with the U.S. in AI?

Kai-Fu LeeIn terms of market value, tax volume and user base, China leads in voice recognition, machine translation and computer visualization, and probably in AI banking and drones.

Visitors watch a demonstration of robot surgery system during the World Artificial Intelligence Conference (WAIC) 2018 in Shanghai, east China. (Photo/Xinhua)

Chinese companies are very strong at writing code, making sure it’s lean and fast and solves customers’ problems, probably stronger than any other country.

The U.S. certainly leads in autonomous vehicles and robotics, and it is the strongest in B2B AI, that is, using AI in enterprise applications to help companies improve sales, manage customer and employee satisfaction, human resources.

So roughly speaking, it is about 50-50 right now. But if there is a breakthrough, I think everything gets reshuffled. So whichever country or company makes that breakthrough, it will change the game. But we can’t predict when breakthroughs will come. I can say for the last five to seven years, there have been no other breakthroughs.

Some people may be confused because they think, hey, I see a breakthrough every week, there is AI beating humans at Go, at debating, in medical image analysis. What do you mean there are no breakthroughs?

These are merely applications built on the same research paper by Jeff Henson, Young Lakon and Yasuo Bengio. The three researchers wrote a set of papers on deep learning that was the one single breakthrough on which all the applications are built.

So, if this continues, I think China will have a very good chance to become number one, or at least a very strong number two in the field of AI.

China FocusWhat does the future hold for AI and China?

Kai-Fu LeeI think in the next 10 or 15 years, I can say with great confidence that China and the U.S. will be the two greatest AI superpowers in the world. AI will deliver tremendous value, it will create about $17 trillion in the next 10 years.

So, the impact of AI, in terms of reducing poverty and hunger, will be tremendous.

Eventually, the 30 or 40 years by then, all routine jobs will be done by AI. People will be incredibly liberated because you no longer have to cook the dishes. In stores, everything you need will automatically be sent to you and if you want fast food, it will be instantly prepared and available when you arrive.

A Baidu Deur assistant at a KFC outlet in Shanghai can talk with customers and take food orders. (Photo/China Daily)

Imagine half of your time being freed up, not having to do routine work and being able to do things that you love and spend more time with the people you love. I think that is the likely scenario in 40 years.

But having said that, there will be a rather challenging in the next 20-25 years because currently, every country has different kinds of laws that make access to large amounts of data most difficult.

For example, the largest high-quality cancer database only has 20,000 samples, but for computer visualization, a face recognizer is trained on 5 billion samples, so look at that gap. Thus, I think we still have a long way to go. As a cancer survivor myself, I personally think 90 percent of cancer patients would happily donate their data for the purpose of AI research.

But governments don’t seem to allow this to happen. There are many people whose jobs are largely routine and those will be over time taken by AI. There are people whose job is the meaning of their lives and I think they can’t accept such a utopian answer, but I also think we need to be responsible and help plan a good future for all of us.

So, the possibilities are endless, but I think there are challenges in the application of AI that will take time. Still, if we look at a 15-20 year horizon, I do think our overall health and longevity will be significantly enhanced through the use of AI.