The AI China Report #5
Your executive summary on the geopolitics of AI & China 🇨🇳 - Issue #5
Welcome back to The AI China Report. This week we’re covering Biden’s new AI sanctions on China, Henry Kissinger’s opinion piece on the AI arms race, and new announcements from Chinese tech giants.
QUOTE OF THE WEEK
“For the last two years with a group of technology leaders at the forefront of the AI revolution, we have concluded that the prospects that the unconstrained advance of AI will create catastrophic consequences for the United States and the world that leaders in governments must act now.”
- Henry Kissinger on the AI arms race
ONE BIG STORY: THE US-CHINA AI CHIP WAR ESCALATES
Last Tuesday the Biden Administration announced new restrictions on the export of AI chips aiming to curb China’s ability to acquire top-of-the-line chips needed to develop more advanced AI technologies.
The new restrictions are aimed to close loopholes in sanctions that the US introduced last October which stopped US companies, especially Nvidia, from directly selling their H100 and A100 semiconductor chips, the world’s most powerful AI training chips, to Chinese companies. Many geopolitical experts from the US and China likened these restrictions to an act of economic warfare.
US companies like Nvidia and AMD responded by developing new slower chips that complied with US restrictions so that they could still do business with Chinese companies, where there is still a large demand for US chips. Chinese tech companies reportedly ordered over $5B worth of these less powerful chips this year, but with the latest US sanctions it’s unknown whether or not those orders will be fulfilled.
Last year’s sanctions had loopholes that allowed some Chinese companies to purchase the higher-end chips if they weren’t planning to use them for AI technology development. After concerns that this loophole was being abused to get the technology into China, the new restrictions unilaterally block the export of the most powerful chips to China no matter the use case.
The new sanctions also limit US exports to Saudi Arabia and other Middle Eastern countries, as US officials have concerns that China could be leveraging its relationships with governments in the Middle East, using them as a proxy to purchase the most powerful chips. Financial Times recently reported that Saudi Arabia and UAE have been buying up large quantities of the H100 and A100 Nvidia chips, which spooked many US officials.
China’s Foreign Ministry spokesperson, Mao Ning, responded to the new sanctions saying, “the US needs to stop politicizing and weaponizing trade and tech issues and stop destabilizing global industrial and supply chain”.
The Biden Administration's intensified restrictions on AI chip exports underscores the escalating techno-political tensions between the U.S. and China. The global technological landscape faces increasing uncertainty as nations grapple with the intertwined futures of technology and geopolitics as an AI arms race is looming, or perhaps is already underway.
NEWS ROUNDUP
Henry Kissinger wrote an opinion piece on the path to AI arms control between the US and China, likening the upcoming arms race to that of the nuclear threat era during The Cold War. It highlighted the concept of mutually assured destruction (MAD) that eventually led Russia and the US to hold informal meetings after realizing they had a shared interest in protecting their own citizens and that a nuclear war could not be won, therefore they needed to work together to ensure that a nuclear war never began in the first place. Kissinger proposes that a similar realization and diplomacy is needed between the US and China in the AI arms race. (Foreign Affairs)
Putin visited Beijing last week and met with Xi Jinping to emphasize their strong partnership that counters the Western global order. Their alliance, strengthened by geopolitical ambitions and a shared interest in diminishing American global power, is further highlighted by their mutual stance on the Israel-Hamas conflict and economic collaboration, with Russia's dependence on China growing due to international sanctions imposed on Russia for its actions in Ukraine. (NYT)
The intelligence chiefs of the Five Eyes alliance, comprising the United States, Britain, Canada, Australia, and New Zealand, have jointly accused China of intellectual property theft and utilizing artificial intelligence for hacking and espionage. This joint statement emerged from meetings with tech companies in Silicon Valley. U.S. FBI Director Christopher Wray described China's tactics as increasingly brazen, targeting various sectors from robotics to biotechnology. In retaliation, a Chinese government spokesman rejected these claims, urging objectivity in viewing China's progress. This marks the first public unified stance by the Five Eyes countries against China's alleged intellectual property infringements. (Reuters)
Jon Stewart and Apple TV Plus have reportedly ended their collaboration over "creative differences" related to The Problem With Jon Stewart. Concerns about the show's discussions on artificial intelligence and China were cited as major issues for Apple, leading to the show's abrupt cancellation just weeks before new episodes were set to be filmed. (The Verge)
Nvidia and Foxconn (the Chinese company known for manufacturing many Apple products and the world’s largest contract manufacturer of electronics) announced a collaboration to create AI factories, leveraging Nvidia's GPU computing infrastructure to accelerate the development of autonomous technologies, including self-driving cars and industrial robots. (TechCrunch)
Hangzhou, a major city in China and headquarters of tech giant Alibaba, is leveraging AI for societal benefits. The local government has plans to make Hangzhou a leading AI city, integrating AI into social welfare, digital governance, and business strategies. Hangzhou is adopting AI-driven solutions like dynamic bus routing, automated car park fee collection, AI-powered information boards, and environmental monitoring systems. (SCMP)
Chinese tech giant Baidu announced in Beijing that their AI model, Ernie 4.0, has matched the capabilities of OpenAI's GPT-4, positioning Baidu at the forefront of China's AI race against the US. Despite Ernie surpassing 45 million users, Baidu faces challenges from tech rivals and U.S. sanctions but continues to lead in AI investment and has integrated Ernie into its primary services, gaining government support. (Fortune)
Beijing-based AI firm Zhipu, announced it has raised over $340M this year, with investment comping from Chinese tech giants like Alibaba, Tencent, Meituan, and Xiaomi. (Reuters)
DATA TO KNOW
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