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Chinese tech companies are swiftly embracing the rise of generative AI products, setting the stage for intense competition with their Western counterparts. On September 7, 2023, Tencent, one of China’s tech behemoths, entered the fray by unveiling its artificial intelligence-driven large language model named Hunyuan.
Tencent’s latest offering is capable of image generation, copywriting, text recognition, and customer service. For now, Hunyuan will cater to domestic enterprises. The company has yet to provide specific information regarding when the chatbot will become accessible to the general public.
This development follows previous initiatives by several major Chinese tech firms. ByteDance, Baidu, and SenseTime have already launched their AI chatbots. Alibaba Cloud has also completed the filing process for its large language model, signalling its imminent entry into the competitive arena.
China’s Baidu is slated to release the next version of its generative large language model, Ernie 4, by the end of 2023, further intensifying the global AI race.
“China’s strategic advantage lies in its wealth of data and a highly skilled pool of computer scientists and engineers. Market dynamics also drive diverse AI applications and nurture innovation. With favourable policies and flexibility, China’s AI sector exhibits remarkable growth, nurturing pioneering enterprises,” writes Sauradeep Bag, Associate Fellow at the Observer Research Foundation.
China’s AI chatbots to compete with the dominant players in the US
As China’s AI chatbots continue to prop up, they are poised to compete with dominant players in the United States.
U.S. tech companies are not resting on their laurels either, constantly refining their AI models and algorithms. OpenAI, for instance, introduced its latest large language model, GPT-4, in March 2023.
Also, when it comes to private investments in AI, the United States maintains a substantial lead. In 2022, the U.S. received a staggering $47.4 bn in private AI investment, dwarfing China’s $13.4 bn investment by roughly 3.5 times. This significant funding disparity underscores the financial backing that continues to fuel AI advancements in the United States.
Additionally, the United States retains its leadership position in terms of the total number of newly funded AI companies. It boasts 1.9 times more newly funded AI companies than the combined total of the European Union and the United Kingdom and a remarkable 3.4 times more than China.
On the flip side, China stands out in the global AI landscape by maintaining its leadership in the total number of AI journal publications, conference contributions, and repository submissions.
“US-based tech companies, such as OpenAI, Microsoft, and Alphabet, have dominated the AI conversation. However, that may well change, given developments from the likes of Baidu, as well as China’s strong foundation for continued AI development,” said Global X.
Challenges facing China’s fledgling AI chatbot market
Expansion of China’s AI chatbot market poses significant challenges, and it’s not just competition from Western countries like the US that presents issues. A major roadblock for China’s generative AI industry is that Chinese companies can only offer their services to a limited number of users until they receive approval for broader public use.
Additionally, the Cyberspace Administration of China has emphasised that while the country supports AI innovation and application, AI-generated content must align with China’s core socialist values. These factors can lead to unpredictable outcomes for AI chatbots, potentially generating overly cautious or evasive responses, resulting in a less satisfactory user experience.
Furthermore, for Chinese AI chatbots to compete on a global scale, they must adapt to international standards and expectations. Overcoming language barriers, addressing cultural differences, and managing cross-border data transfer requirements pose substantial challenges.
Overall, China’s AI market remains in its early stages, with the anticipation of more comprehensive legislation. A draft artificial intelligence law is expected to be drafted by China’s State Council this year, which, in turn, will be reviewed by the county’s apex legislative body.
“China is in the midst of rolling out some of the world’s earliest and most detailed regulations governing artificial intelligence (AI). China’s emerging AI governance framework will reshape how the technology is built and deployed within China and internationally, impacting both Chinese technology exports and global AI research networks,” writes Matt Sheehan, a fellow at the Carnegie Endowment for International Peace.
Looking ahead, investment banking firm CLSA holds the belief that China will capture a share exceeding 6% of the estimated $1 tn global AI spending by 2026, cementing its position as the second biggest AI market globally behind the US.
