China’s appetite now focused on artificial intelligence

China has recently announced their long-term goal to become #1 in A.I. by 2030. They plan to grow their A.I. industry to over $22 billion by 2020, $59 billion by 2025 and $150 billion by 2030. They did this same type of long-term strategic planning for robotics – to make it an in-country industry and to transform the country from a low-cost labor source to a high-tech manufacturing resource, and it’s working.

China's Artificial Intelligence Manifesto

With this major strategic long-term push into A.I., China is looking to rival U.S. market leaders such as Alphabet/Google, Apple, Amazon, IBM and Microsoft. China is keen not to be left behind in a technology that is increasingly pivotal — from online commerce to self-driving vehicles, energy, and consumer products. China aims to catch up by solving issues including a lack of high-end computer chips, software that writes software, and trained personnel. Beijing will play a big role in policy support and regulation as well as providing and funding research, incentives and tax credits.

The local and central government are supporting this AI effort,” said Rui Yong, chief technology officer at PC maker Lenovo Group. “They see this trend coming and they want to invest more.

Many cited the defeat of the world's top Go players from China and South Korea by the Google-owned A.I. company DeepMind and their AlphaGo game-playing software as the event that caused China's State Council to enact and launch its A.I. plan which it announced on July 20th. The NY Times called it “a sort of Sputnik moment for China.”

Included in the announcement:

China will be investing heavily to ensure its companies, government and military leap to the front of the pack in a technology many think will one day form the basis of computing. The plan covers almost every field: from using the technology for voice recognition to dispatching robots for deep-sea and Arctic exploration, as well as using AI in military security. The Council said the country must “firmly grasp this new stage of AI development.” China said it plans to build “special-force” AI robots for ocean and Arctic exploration, use the technology for gathering evidence and reading court documents, and also use machines for “emotional interaction functions.” In the final stage, by 2030, China will “become the world’s premier artificial intelligence innovation center,” which in turn will “foster a new national leadership and establish the key fundamentals for an economic great power.”

Chinese Investments in A.I.

The DoD regularly warns that Chinese money has been flowing into American A.I. companies — some of the same companies it says are likely to help the United States military develop future weapons systems. The NY Times cites the following example:

When the United States Air Force wanted help making military robots more perceptive, it turned to a Boston-based artificial intelligence start-up called Neurala. But when Neurala needed money, it got little response from the American military. So Neurala turned to China, landing an undisclosed sum from an investment firm backed by a state-run Chinese company. Chinese firms have become significant investors in American start-ups working on cutting-edge technologies with potential military applications. The start-ups include companies that make rocket engines for spacecraft, sensors for autonomous navy ships, and printers that make flexible screens that could be used in fighter-plane cockpits. Many of the Chinese firms are owned by state-owned companies or have connections to Chinese leaders.

Chinese venture firms have offices in Silicon Valley, Boston and other areas where A.I. startups are happening. Many Chinese companies — such as Baidu — have American-based research centers to take advantage of local talent.

The Committee on Foreign Investment in the United States (CFIUS), which reviews U.S. acquisitions by foreign entities for national security risks, appears to be blind to all of this.

China's Robot Manifesto Has Been Quite Successful

Chinese President Xi Jinping initiated “a robot revolution” and launched the “Made in China 2025” program. More than 1,000 firms and a new robotics association, CRIA (Chinese Robotics Industry Alliance) have emerged (or begun to transition) into robotics to take advantage of the program. By contrast, the sector was virtually non-existent a decade ago.

Under “Made in China 2025,” and the five-year robot plan launched last April, Beijing is focusing on automating key sectors of the economy including car manufacturing, electronics, home appliances, logistics, and food production. At the same time, the government wants to increase the share of in-country-produced robots to more than 50% by 2020; up from 31% last year and to be able to make 150,000 industrial robots in 2020; 260,000 in 2025; and 400,000 by 2030. China's stated goal in both their 5-year plan and Made in China 2025 program is to overtake Germany, Japan, and the United States in terms of manufacturing sophistication by 2049, the 100th anniversary of the founding of the People’s Republic of China. To make that happen, the government needs Chinese manufacturers to adopt robots by the millions. It also wants Chinese companies to start producing more of those robots and has encouraged strategic acquisitions.

Four of the top 15 acquisitions in 2016 were of robotic-related companies by Chinese acquirers:

Midea, a Chinese consumer products manufacturer, acquired KUKA, one of the Big 4 global robot manufacturers The Kion Group, a predominately Chinese-funded warehousing systems and equipment conglomerate, acquired Dematic, a large European AGV and material handling systems company KraussMaffei, a big German industrial robots integrator, was acquired by ChemChina Paslin, a US-based industrial robot integrator, was acquired by Zhejiang Wanfeng Technology, a Chinese industrial robot integrator

The Robot Report wrote an extensive review of robot growth in China and recapped 500 of them by type and sub-category. For fundings and acquisitions in 2017, read the monthly posts on the subject.