China aims to overtake US as global leader in AI innovation

The US remains the global leader in artificial intelligence (AI) innovation, despite big moves by China to change its standing, according to a study from the Center for Data Innovation, released this week.
 
The study focused on six distinct categories—talent, research, development, adoption, data and hardware—and found that the US was far ahead of both China and the European Union in at least four of them. 
 
With the help of Amazon, Apple, Facebook, Google, Intel and Microsoft, the US was able to financially dominate the last wave of digital innovation. But China has doubled down on its efforts to become equals with the US and now invests heavily into educating and funding AI research.

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“The United States is leading in AI today, but it should not rest on its laurels,” Michael McLaughlin, the Center’s research analyst and the report’s lead author, wrote in the study. “To maintain its lead, the United States should focus on policies that grow its domestic talent base, enable foreign AI talent to immigrate, and increase incentives for research and development.”

Center for Data Innovation researchers created a 100-point metric to measure how China, the US and the EU are doing in comparison to each other. The US managed to score the highest with 44 points and lead China and the EU in talent, research, development and hardware.

“The United States leads for several reasons. First, it has the most AI start-ups, with its AI start-up ecosystem having received the most private equity and venture capital funding. Second, it leads in the development of both traditional semiconductors and the computer chips that power AI systems,” the study stated. “Third, while it produces fewer AI scholarly papers than the EU or China, it produces the highest-quality papers on average. Finally, while the United States has less overall AI talent than the European Union, its talent is more elite.”

China came in second with 32.3, due in no small part to the massive advantage they have in terms of data collection. Researchers need large data sets in order to get AI systems to function properly and the Chinese government has no qualms about collecting data on millions of their citizens. 

The nation has also reached a point where venture capital and private equity funding is on par each year with what is spent in the US. One of their main issues is not just the level of AI talent they produce, but the ability to keep them in China. 

China has poured billions into universities to improve the skill levels of AI workers, but many of the best minds end up coming to the US to capitalize on their knowledge. The same goes for the EU, which had the highest number of AI researchers compared to the US and China but was unable to capitalize on it.

“The data reveals that while the European Union has lots of AI talent, its top businesses have less talent than U.S. firms, which, combined with a lack of venture capital and private equity funding, could hurt its ability to develop globally leading AI firms. For example, of the 20 companies with the most AI talent, according to AI paper and patent records, in 2017, half were based in the United States,” according to the report. “These ten U.S. companies combined for 1,623 AI workers. In comparison, the European Union had six such companies, totaling 522 AI workers.” 

In tacit recognition of how far behind they are, the EU released a 173-page plan on Friday to create a $100-billion European Future Fund dedicated to funding European companies that have potential. 

China was able to keep up with the US in part because it refused to allow many US tech companies to operate within their borders, forcing native companies to fill in the gaps. The study includes dozens of recommendations for each country or bloc, but also says AI innovation is not a zero-sum game to be won or lost entirely. 

“AI is the next wave of innovation, and overlooking this opportunity will pose a threat to a region’s economic and national security,” Daniel Castro, the Center’s director, wrote in the report. “Gaining an early lead in AI will boost a region’s economic competitiveness, but there are many factors they need to get right.”

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