More than 80% of Chinese companies already use GenAI, which is higher than the global average

According to a study by SAS conducted in partnership with Coleman Parkes Research, more than 80% of surveyed Chinese business leaders now use GenAI in their operations, exceeding the global average of 54% and the U.S. average of 65%.

“China is clearly leading the way, not only in the practical aspects of implementing AI into existing systems and processes, but also in building trust by preparing to comply with AI regulations,” the report said.

China is turning to generative AI to help manage its “massive population” and the data collected from it, suggests Bryan Harris, chief technology officer at SAS. “Pioneering work in generative AI could give China a competitive edge in the world when it comes to unlocking value and data,” he says.

Still, security concerns like hallucinations, deepfakes and data privacy are forcing governments to quickly develop regulations around the new technology.

The SAS study found that around 70% of business leaders in the Asia-Pacific region believe they are “fully prepared” or “moderately prepared” to adapt to upcoming AI regulations, compared with 59% in North America and 52% in Northern Europe.

Last year, Beijing published some of the world’s first regulations governing generative AI. The rules required chatbots to adhere to “core socialist values” and protect national security. But the penalties were not as severe as observers had feared, which analysts saw as a signal of Beijing’s support for the fledgling industry.

In October, the Biden administration passed an executive order that, among other things, called on AI developers to share security testing data with the U.S. government. Then, earlier this year, the European Union passed its own comprehensive set of AI regulations, called the AI ​​Act.

Still, AI companies can struggle to navigate the maze of AI rules. “It’s good to have rules. It’s just not good to have three different ones,” Brian says. “It’s inefficient.”

China’s Investments in Artificial Intelligence

Since the release of OpenAI’s ChatGPT in 2022, Chinese tech companies large and small have been rushing to build their own language models and generative AI programs.

Big tech companies like Baidu, Alibaba and JD.com are investing in their own big language models; Baidu says its ERNIE LLM outperforms the latest version of GPT-4 on some Chinese-language tasks. Several Chinese startups like 01.AI, founded by former Google China CEO Kai-Fu Lee, are also racing to release chatbots and other generative AI products.

But Chinese AI companies are also grappling with a shortage of AI chips, exacerbated by U.S. controls that ban the export of advanced processors (such as those made by Nvidia) to China. Startups are reportedly rationing the use of their products due to a lack of processing power.

On Monday, iFlyTek — one of China’s leading AI developers — said it was likely to post a net loss of up to $64.53 million in the first half of the year, which it partly blamed on “final pressure from the U.S.” in a Shenzhen stock filing. The shares were down 5.4% from Friday’s close.

“All countries are looking for informational advantage as a result of AI,” Harris says, from the national security level all the way to commercial applications. “Generative AI is becoming the new nuclear arms race in this regard,” he says.

Still, Chinese companies have some advantages, such as being “more aggressive” than their American competitors when it comes to combining data sets and applying them to AI models, Harris says.

He’s optimistic that Chinese companies like Alibaba can still catch up with their American counterparts like OpenAI, even with the shortage of cutting-edge GPUs. “What’s cool about this whole movement is that innovation is happening almost simultaneously all over the world. That’s a good thing, right?”

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