China and a new cyber arms race

James Riley
Editorial Director

If there were any doubts about the broad direction of the next wave of technological development, China has put them to rest with a national artificial intelligence strategy amid talk about a US-China AI ‘arms race.’

It seems only moments since China and the US were gearing for full scale backdoor assaults in a globally devastating cybersecurity war. Now we realize they had been setting their dramatic sights far too low.

‘Cyber’ it now seems, has been only a descriptor for the battle, rather than the war. Before Malcolm Turnbull can say “agile and innovative”, his old favorite fintech and its cousins agtech, regtech, and the rest are being replaced by cyber’s sibling – such as augmented reality, machine learning, advance data webot analytics, enterprise bots and so one and so forth.

Li Keqiang: Telling the National People’s Congress China will invest heavily in AI

Welcome, ladies and gentlemen to the next chapter in the age of the machines. But unlike Henry Ford’s automotive machine revolution, this one will have a decidedly Chinese flavor (although don’t dismiss its wealthier but smaller rivals Japan, South Korea, Taiwan and Singapore).

A signal of how important this strategy is to the Middle Kingdom is that it was announced over the weekend at the annual Two Session meeting of the rubber stamp parliament the National People’s Congress and its “advisory” body, the Chinese Peoples Political Consultative Committee. The meeting runs until March 15.

The plan will be released shortly, China’s Science and Technology Minister Wan Gang told journalists at a press briefing on the sidelines of the conferences

“In the meantime, the central government will set up a special fund for the fundamental research and core technologies [of artificial intelligence],” Wan said.

While no amount has been set for the fund, the Chinese Government has been ramping up both its rhetoric and spending in the technology sector in recent years, as its moves its manufacturing sector up the value chain into more sophisticated machine-making from its mass market garments and homeware roots.

A handful of China’s clutch of rolled-gold internet oligarchs met with leaders in Beijing last week as part of a carefully choreographed dance designed to show the symbiosis between the ruling Communist Party and the country’s billionaires.

Arguably nowhere is this more important that in the online sector. This is where operators like Tencent and its mobile phone chat app WeChat juggernaut must bend to every request of the country’s powerful internet censors which continue to reinforce the so-called Great Firewall of China.

The Great Firewall block or massively slows down loading times for foreign and undesirable websites, a list whose notable inclusion include Facebook and Twitter and Google. (Handy travel tip: if you are travelling to China make sure you have an email alternative to Gmail).

As well, Chinese cities are increasingly monitored by millions of streetcams.

“Luminaries from the technology sector including Robin Li Yanhong, founder of the Chinese internet search engine Baidu, and Lei Jun, owner of smartphone maker Xiaomi, met with senior officials in Beijing last week to urge the government to provide support for the development and industrialisation of AI technology,” the South China Morning Post noted.

“The development of AI has come to a tipping point,” Mr Li said.

Like many of his fellow internet tsars, Mr Li has been co-opted by the government, and is a delegate of the Chinese People’s Political Consultative Conference (CPPCC), a political advisory body.

“Whichever country makes a breakthrough in application can have a bigger chance to lead the world in AI technology. China’s AI prowess is certainly the second best in the world, if not the best.”

According to market research firm Venture Scanner, China ranks number two globally, with US$1.1 billion raised, the AI sector to date well behind the United States with US$8.1 billion with the rest of the world combined in vesting a total of US$3.1 billion.

“Artificial intelligence has just gotten hotter, Li Keqiang, the Chinese premier, recently told the NPC delegates that the country will invest in the R&D and commercialisation of AI,” Larry Cao, director at the CFA Institute in Hong Kong wrote in an analysis of the announcement, adding that this announcement has at least three important implications:

“First, the power of artificial intelligence has become more real than ever in the post-Deep Blue and AlphaGo world. AI is a very fundamental technology that could potentially revolutionize many industries as we know it today.

“Second, much of AI’s potential has yet to be unleashed. R&D and commercialization efforts are high risk and often long term in nature so government backing can go a long way in this area.

“If the Chinese government provides strong funding support, it will give China an edge in this competitive field.

“Third, given the risky nature of these investments, we’d suggest that investors use caution. Markets have responded very positively to the news but investors should carefully analyse and understand the commercialization prospects of the AI-themed companies they are looking to invest in.”

China’s announcement was almost perfectly timed, coming hot on the heels of the latest Wikileaks dump which “revealed” that spy services keep a trove of hacking tools. (I mean really, people are shocked at this? Under which rocks in Pollyannaland have they been hiding?)

And it’s not much of a jump to think that spy services across the world are also doing this because that is precisely why they exist.

But it sure puts a bit of a dampener on the Internet of Things knowing that your friends at ASIO may be taking a peak at you in your pyjamas as you sneak some cold leftover sweet and sour pork in the wee hours.

Still, while AI is hitting the mainstream headlines, it’s worth noting that it’s been a long time coming. It is a years since Stephen Spielberg made his big budget feature AI: Artificial Intelligence (just in case you didn’t get it the first time).

Nonetheless, it is unlike most arms races. This is one that Australia should very much be part of.

Malcolm Turnbull’s point man in South Australia, the effective Minister for Adelaide Christopher Pyne, who previously looked after Innovation in Federal Cabinet is in prime position to drive an AI strategy for Australia.

It’s time we heard from him.

Do you know more? Contact James Riley via Email.

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