Former Google CEO Eric Schmidt said China’s dominance in artificial intelligence could be hampered by a funding gap in the field. He offered a grim assessment of China’s AI prospects as China and the United States vie for dominance.
However, analysts say that funding will not be an issue for China’s AI development given the deep pockets of its private and state investors, especially as Beijing, big tech companies and investors are united in their determination to accelerate AI development from chips to applications.
Schmidt said China lacked the same “financial market depth” compared to the United States, which has the world’s “most extraordinary capital markets,” adding that Chinese startups actually “can’t get the money” to keep up with the AI race.
Do you have questions about the hottest topics and trends from around the world? Get the answers with SCMP Knowledge, a new platform of curated content with explainers, FAQs, analyzes and infographics brought to you by our award-winning team.
“It’s very difficult to produce these large models with this kind of complex training without access to funding,” Schmidt said Monday at a forum hosted by the Harvard Kennedy School, according to a video posted on the Harvard Kennedy School’s YouTube channel.
Schmidt’s comments reflect that China’s challenging economy and changing start-up environment have dampened interest from market-driven venture capital funds in recent years.
The trend has since been exacerbated by U.S. restrictions that have prevented venture capital funds — historically one of the largest sources of capital that have made lucrative bets on China’s tech and internet growth — from backing key Chinese industries, including artificial intelligence, on national security grounds.
However, capital from governments and big tech companies has flowed in to make up for the lack of market-driven venture capital, analysts at global startup and venture capital data service PitchBook said.
Melanie Tng, an analyst at PitchBook who focuses on Asia-Pacific private capital, said in a report this week that capital formation in China now comes from and will continue to be “driven by state-backed programs and corporate ecosystems” as non-domestic participation remains limited.
“In China, a combination of provincial subsidies and corporate initiatives… [Big Tech] Companies continue to support large-scale AI commercialization, even in the private sector [venture capital] Liquidity is tightening,” Tng said.
