China goes slow on AI momentum

China has joined the global rush to generative artificial intelligence, boasting close to 80 AI models from firms like Baidu and Alibaba and startups attracting almost $14 billion of funding over the last six months. But unlike in the West, where OpenAI’s ChatGPT has attracted more than 100 million monthly users whose inputs help it to learn from to constantly refine and improve its product, no Chinese AI chatbots have been made available to the people. It speaks to the new reality in China’s technology sector and the effectiveness of Beijing’s years-long regulatory crackdown, culminating with large fines against Ant Group and Tencent last week. Once known for a cutthroat, “race to market” spirit particularly in the consumer internet sector, companies are slowing down to toe the line and take their cues from Beijing. The previously free-wheeling industry is now seen to be largely compliant, with firms from Alibaba to Tencent making over their businesses, slowing down expansion into new areas and laying off thousands of staff, according to Reuters. New rules Chinese firms have to comply with range from algorithm vetting to accepting security reviews of data they want to export. But while Beijing now has a handle over what it viewed as excesses and misbehaviour that arose from the industry’s runaway growth, some experts are beginning to sound the alarm bells on the impact on future competitiveness with Western rivals, given the balance companies are having to strike.

Chinese regulators last week said most of the problems with the country’s platform companies had been rectified, moves seen as a signal the crackdown is finally over. Industry executives say these challenges are particularly acute in generative AI as global interest in the technology surges following the success of Microsoft-backed ChatGPT and Chinese firms race to catch up with US peers. While several highly publicised launches have been held in China, from Baidu’s Ernie Bot to SenseTime’s SenseChat, all remain in beta testing and only open to selected users, adds the Reuters report. In May, Baidu CEO Robin Li said it was waiting for government approval for Ernie Bot. Having more users helps ChatGPT refine its model to better account for language patterns like slang and idioms, detect errors, respond to uncommon scenarios and reduce cultural biases in responses, according to the chatbot. A key motivation behind China’s reluctance to release AI chatbots is that Beijing fears uncensored chatbots may start influencing societal views in potentially subversive directions, said Mark Natkin, managing director of research firm Marbridge Consulting. China in April outlined a set of draft measures for generative AI services that said firms would need to submit security assessments to authorities before launching their products. Analysts have criticised some of the rules as particularly onerous, such as an obligation for AI service providers to verify the truth and accuracy not just of what the AI models produce but also of the material used to train them. The measures are expected to be finalised and in place by the end of this year. The Chinese government is also preparing a dedicated AI law but has not provided details.

To be sure, China is seen to be ahead of the regulatory curve as countries globally grapple with establishing guardrails on the wildly popular technology, weighing safety and copyrights while maintaining an environment conducive for innovation. Most of the Chinese tech companies have instead for now focused on finding applications for industrial use, a direction analysts said was in line with Beijing’s priorities and a key goal of the new regulatory framework. Chinese President Xi Jinping has stressed he wants to see more energy put towards “hard” technologies such as semiconductors and industrial AI applications, and breakthroughs that could help China reduce reliance on Western technology. Huawei Technologies said last week its Pangu AI model would mostly serve enterprise customers for applications like safety inspections for freight trains and weather prediction.