Saturday, September 1, 2018

Leapfrog for Cchina to catch Silicon Valley in AI



Edited version first appeared in Asia Times.

Kai-fu Lee’s book on artificialIntelligencehttps://www.amazon.com/AI-Superpowers-China-Silicon-Valley-ebook/dp/B0795DNWCF will be published by Houghton Mifflin Harcourt in September and Dr. Lee is already scheduled to make several appearances in the Bay Area to talk about his book around the last week of September.

The full title of his book is “AI Superpowers: China, Silicon Valley, and the New World Order.” In his book, Lee makes the startling contention that within the last three years, China has caught up to Silicon Valley in AI. And, no, Mr. Trump, it’s not because the Chinese has stolen the algorithm from Google. Rather, China leapfrogged the US in mobile computing, which enabled China to take a different path to AI nirvana.

Dr. Lee is one of the pioneer creators and thinkers of artificial intelligence. After he obtained his doctorate degree in AI from Carnegie Mellon, he joined Apple in Cupertino to develop the voice recognition system and then left for China to build research centers of excellence for Microsoft and Google. Now he is the premier venture capitalist investing in AI startups in China.

Nowadays, artificial intelligence has become part of daily conversation, even if not everyone understands what AI is all about. Wall Street considers AI to be the latest winning investment in technology following the Internet and the smart phone. Lee believes development of AI is even more profound than that, equating the future impact of AI on the human civilization to be as fundamentally revolutionary as the invention of the steam engine that ignited the first industrial revolution and electricity for the second.

Deep learning raised the power of artificial intelligence

AI became a real emerging technology when researchers moved machine learning to the next level called “deep learning.” Properly designed algorithm, called neural network, can learn to fine tune its algorithm by repetitive trial and error calculations, at lightening speed, until the best solution is derived based on the data set fed to the algorithm. The bigger the data set that’s fed to the algorithm, the better is the resulting optimization and solution.

The importance of big data, explains Lee, has allowed China to close the gap with Silicon Valley in AI because China generates much more useful and higher quality data than in the US. Lee credits Steve Job and the introduction of the smart phone as the event that pushed China into AI development.

Observers in the West may not have noticed that as China’s economy grew at dizzying rates in the 40 years since reform began, the country leapfrogs certain crucial development along the way. Telecommunication is one such example. When China began its economic reform, its telecommunication network was woefully inadequate. The country was so under invested in copper wire lines overland that it was easier for the consumer to adopt the mobile phone rather than waiting for the allocation of a landline.

The smartphone facilitated China’s entry into AI

When Apple introduced the iPhone in 2007, China already had the largest number of mobile phones users in the world, and the users were primed to upgrade to a smartphone, albeit not always an iPhone but a lower priced, domestically made alternate. At the time most Chinese did not own a computer at home and the smartphone gave the Chinese user Internet access bypassing the need to buy a computer.

Chinese entrepreneurs quickly learn to develop apps specifically for the smartphone. For example, being decades behind the West, the use of credit card never really took off in China. Now with WeChat, considered a “superapp” by Lee, the smartphone can be linked to the owner’s bank account and the phone becomes a digital billfold able to make and receive payments.

The American AI monitors the user preferences such as what website the user visits. In China, Tencent, the owner of WeChat, can gather data not only on what the user looked at, but what he/she bought, from whom, where and when. The data collected is much higher quality and multi-faceted. In addition, China has at least 3 times more users generating data for feeding into AI optimization than in the US.

The author argues that while China remains behind the US on the creative side of writing AI algorithm, China has been closing the gap and in some aspects surpassing Silicon Valley for certain uses of AI. This has occurred within the most recent three years because China has been gushing high quality data derived from the smartphone.

Data drive the AI virtuous cycle

The vast quantity of quality date is helping China refine their AI, which helps to improve the product offering, which increases customer acceptance, which generates even more data to optimize the AI program. Lee calls this the virtuous cycle of AI whereby the availability of date would allow an inferior AI algorithm to surpass the performance of a superior AI that do not have access to as much data.

One example would suffice to illustrate the difference between China and the US. A program in China called Smart Finance has used AI and access to the user’s smartphone to determine the creditworthiness of the individual and grant the user a personal loan. No collateral, no credit report, no personal references, and no banking information are needed. And the single digit loan default rate is the envy of commercial banks.

Apparently AI correlation of hundreds of data points residing in the smartphone (Lee calls them weak features) can more accurately evaluate the reliability of the borrower, even if no human banker can fathom why. The iteration of AI over millions of smartphones have established predictive rules and the accuracy will only improve with use—and default becomes even more uncommon.

While ground breaking AI research will continue in the US, China is graduating upwards of a million AI engineers every year. They are motivated and will work long hours to find new products and services based on AI solutions. And the access to huge amount of data will more than offset their not being as good in designing the algorithm.

China’s leadership recognizes the importance of AI and has allocated financial support to encourage and further AI research. The US? Not so much federal support and America will continue to depend on private sector efforts. Private sector AI will remain proprietary and be kept behind closed doors.

The author does not express much anxiety over the possible rivalry between the US and China. He is much more concerned with eventual advances in AI that could lead to wide spread displacement of human by machines. Owners of the powerful AI could become members of a small elite class that enjoy all the wealth and status while an “useless” class of masses can no longer generate enough economic value to support themselves.

This is where Lee becomes very personal drawing from his own dramatic experience as a cancer survivor. He suggests that no matter how advanced AI becomes, it can never replace human interaction that offer love and compassion. He proposes that we begin to prepare for the day by placing higher priority and monetary value for socially beneficial activities. In other words a drastic and basic reordering of our value system based on humanity.

His book is a thoughtful treatise on the possible benefits and destructive damages AI poses to the world. Anyone wanting to understand the downside of unbridled AI advances on the humankind will find relevant questions and answers in this book.
The Committee of 100 is the cosponsor with the Commonwealth Club of Dr. Kai-fu Lee’s speaking engagement in Santa Clara on September 26. Go to here for more information. Dr. George Koo is a retired China business consultant and a regular contributor to online Asia Times.

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