Chinese AI Advances Despite Chip Supply Constraints: Closing the Gap with the U.S.

China's AI landscape is often viewed as both lagging behind and advancing past the United States, highlighting the contrasting strategies employed by both nations. Since the launch of the ChatGPT chatbot by OpenAI, there has been a global rush to develop large language models. However, China faces significant hurdles due to two main factors: restricted access to advanced American chips, which limits its computing power, and stringent data regulations stemming from its Personal Information Protection Law. This law imposes rigorous data protection standards, making it challenging for Chinese companies to access necessary data.

Consequently, Chinese firms are more inclined to focus on developing AI services based on smaller language models. While these models may not deliver the same capabilities as their larger counterparts, they are more cost-effective to create and operate. This practical approach underscores the dynamic of China's technology ecosystem. Although the U.S. ecosystem excels in breakthrough innovations, China demonstrates a strength in execution—finding product-market fits, scaling operations effectively, and delivering affordable applications.

According to a recent report from the World Intellectual Property Organization, between 2014 and 2023, China filed over 38,000 patents related to generative AI, compared to just 6,276 in the U.S. While the number of patents does not directly equate to groundbreaking advancements, China's substantial patent output has the potential to translate into more viable products.

A particularly promising area for AI application in China is electric vehicles. Although Chinese companies may not develop "superhuman" AI, they are likely to pioneer "good enough" human-vehicle interaction technologies ahead of their global counterparts. The Chinese tech industry is often perceived as a behemoth driven by national ambitions; however, effective domestic regulation and external geopolitical challenges create advantages in certain areas while necessitating a competitive catch-up in others.

AI stands as one of the most transformative technologies of our time, and both China and the U.S. have vital roles to play. Ultimately, the most profound challenges humanity faces—ranging from climate change to cancer treatment—are not isolated issues of one nation but a shared global endeavor.

This article was originally published in the South China Morning Post on August 1 by author Jennifer Scott, titled "Despite chip supply restrictions, China narrows the AI gap with the U.S."

Despite its challenges in accessing advanced chips, China is actively closing the AI gap with the United States. Chinese tech companies continue to develop their own large language models and have successfully delivered AI-generated video tools to global users. In contrast, OpenAI, based in San Francisco, while the first to showcase such functionalities, has not achieved widespread adoption. Additionally, Chinese enterprises have launched open-source models, enabling anyone to build their own AI systems, thus contributing to the global advancement of AI technology.