By Bernd Müller.

In his book “AI Superpowers: China, Silicon Valley and the New World Order”, Kai-Fu Lee writes about the global impact of AI and digitalisation, from the loss of jobs and the challenges we face in an increasingly technological world to the need for a cultural shift and a new way of thinking that puts people first in order to prevent society from becoming divided along technological lines.

Kai-Fu Lee’s book ends with a call to action: “Let us choose to let machines be machines, and let humans be humans. Let us choose to use our machines simply as tools, and more importantly, to love one another.” This seems a surprising statement to find in a book entitled “AI Superpowers: China, Silicon Valley and the New World Order”, which directly conjures up images of the technological competition between China and the United States, and of the race between two superpowers to dominate the world of AI. How does Lee arrive at this conclusion?

The evolution of the tech industry in China

This is where renowned AI researcher and entrepreneur Kai-Fu Lee begins his book. Lee, who graduated from high school and university in the United States, has had an impressive career in the IT industry in both the US and China. Following graduation, he went on to work for large tech companies in Silicon Valley, served as head of Google China and eventually founded his own venture capital firm, Sinovation Ventures, in the Beijing-based technology park Zhongguancun.

“We’ve seen big changes in the last five to ten years,” says Lee. Until just a few years ago, China’s tech industry was full of copies of American Internet companies. Google, YouTube, Facebook, E-Bay, Twitter, Uber – they all have their Chinese counterparts in companies such as Baidu, Youku, Weibo, Alibaba and Didi. But now these copycats are evolving, adapting to the needs of Chinese consumers, and bringing products to market for which there are no Western equivalents.

The best example of this is WeChat, an app which began as a simple messenger service developed by Tencent, and which today has grown to become a “digital Swiss Army knife” for nearly all areas of life. New companies have also entered the marketplace, including the group buying website Meituan-Dianping, the online bicycle rental service Mobike, and Bytedance, developer of the popular video-sharing service TikTok, which boasts many users in China and in the West.

Faster, more aggressive, and more customer-focussed

According to Lee, these developments are the result of consistent customer focus and extremely stiff competition. In China successful ideas are quickly copied on a massive scale, forcing Chinese companies to continuously improve their products. They develop new applications, they diversify on a large scale, when necessary they pursue aggressive pricing policies, and they monitor their supply chains rigorously. Companies which are unable to secure their product’s position in the market go under fast.

Today, nearly all American Internet companies have left China. Of course government policies have played a role in this to some extent by closing off the Chinese market to foreign Internet firms and providing support to domestic companies in a number of ways – nevertheless, this development is largely the result of Chinese companies being more competitive and able to establish closer relationships with Chinese consumers. By contrast, companies in Silicon Valley have it relatively easy.

The foundations have been established, and now it’s time to bring promising business ideas to market.

First the foundations, then implementation

Developing new products and services at breakneck speeds and operating in an environment characterised by hyper competition does have its disadvantages, says Lee: there’s no time for basic research. Chinese applications are based on foundations developed by European and American companies and institutions. However, says Lee, this is no longer a major issue. The foundations have been established, and now it’s time to bring promising business ideas to market. Unlike in Silicon Valley, what is needed here is not extraordinary talent, but rather a multitude of clever and able programmers – and China is currently in the process of training them.

And China has another advantage: massive amounts of data. More than 60% of people in China are online. That’s more than 800 million people, generating incredible amounts of data for Chinese tech companies to collect. The more data there is, the better and more accurate their AI products will be. According to Lee, Silicon Valley is still in the lead today, but China will soon pull ahead.

“Putting all these pieces together – the dual transitions into the era of implementation and the era of data, as well as China’s world-class entrepreneurs and proactive government, I believe that China will soon match or even overtake the United States in developing and using artificial intelligence.”

The dark side of the digital world

What Lee doesn’t talk about are Internet censorship, AI-powered surveillance and ethical issues relating to data privacy. Rather, in this context Lee talks of China’s “techno-utilitarianism”, which brings about rapid economic development. While China’s top-down approach to modernisation may also lead to waste and misallocation of resources, Lee finds that in “building a society and economy prepared to harness the potential of AI, China’s techno-utilitarian approach gives it a certain advantage.”

As positively as Lee sees the technical and economic development of AI, and as much as he expects China to profit from it, he also predicts that the social repercussions will be drastic – and not only for the two superpowers, but for the entire world. Lee expects that we’ll be able to automate 40–50% of all jobs within the next 10–20 years. Undoubtedly new jobs will also be created, but the market alone will not be able to compensate for the large number of jobs lost, or to bring about the necessary cultural shift.

“If left unchecked, AI will dramatically exacerbate inequality on both international and domestic levels. It will drive a wedge between the AI superpowers and the rest of the world, and may divide society along class lines.” The United States and China will be the AI superpowers; other countries, including Europe, will play a less important role.

New working environments, new processes and monopolies

Jobs which can be performed faster and better by algorithms and robots than by humans are particularly at risk. These include, for example, medical diagnoses, bookkeeping, translations, investment consulting and industrial manufacturing. Also, as supply chains change and manufacturing processes are moved back to their countries of origin, this will have a particular impact on developing countries. Moreover, AI-driven industries also tend to form monopolies.

“Better products lead to more users, those users lead to more data, and that data leads to even better products, and thus more users and more data. Once a company has managed to gain an early lead, this kind of ongoing repeating cycle can turn that lead into an insurmountable barrier to other firms attempting to break into the market. Chinese and American companies have already kick-started this process, leaping ahead to gain massive leads over the rest of the world.”

By contrast, services involving direct human contact, such as nursing, in-home care, childcare, charitable work and social work will be less affected, if at all. However, many of these activities are currently not very highly valued, nor are they very well paid.

A new way of thinking that puts humans first

At the age of 53, Lee was diagnosed with stage four lymphoma. His illness forced him to see his life in a new light and to consider what was truly important. In the face of death, his exceptional professional success as an AI researcher began to lose all significance. He became painfully aware of the cold and calculated manner in which he had engaged with people throughout his life, and how little time he had spent with friends and family. In addition to undergoing chemotherapy, Lee also visited the Fo Guang Shan Buddhist monastery in Taiwan, where his new way of thinking would take root:

“We must recognise that there’s nothing greater or more valuable in this world than the simple act of sharing love with others. If we start from there, the rest will begin to fall into place. It’s the only way that we can truly become ourselves.”

Lee is convinced that the only way for us to overcome the challenges of the AI era is to create a human-machine symbiosis and to bring about a major cultural shift. “We cannot compete against machines, which will be better than us at many things in the future. We have to focus on what makes people unique.” Lee says the transition into the AI era will require us to let go of a mentality which equates life with work, and which sees people as variables in a giant productivity algorithm.

Investing in social togetherness

“Instead, we must move towards a new culture that values human love, service, and compassion more than ever before.” Lee suggests a series of concrete measures, including assuring decent rates of remuneration in care work, community service and education (which Lee calls a “social investment salary”), social engagement on the part of private companies which benefits shareholders, employees, customers and the community (“impact investing”), and a strong government to redistribute the wealth generated by AI.

We cannot compete against machines, which will be better than us at many things in the future. We have to focus on what makes people unique.

Some people may laugh at Lee’s ideas, finding them naive or unrealistic. But Lee isn’t alone. There are other prominent entrepreneurs who think and act in a similar fashion. The most well-known of these is Jack Ma, the founder of Alibaba. In 2019, Ma left Alibaba to devote himself to his foundation. At the 2018 World Economic Forum he said: “We have to teach our kids something unique, so that a machine can never replace them: we need to teach them about values, belief, independent thinking, teamwork, caring for others, the soft skills, sports, music, painting, arts – this is what we need to ensure that humans are different from machines.”

Another example is fashion icon Ma Ke, who founded China’s first fashion label, Exception, and today also designs clothing for the Chinese First Lady. Just a few years ago, she withdrew to found the socially-conscious label Wuyong. “A society without compassion is frightening,” said Ma Ke in 2016 at an event in Beijing focussed on cultural identify, handcrafts, environmental protection and social values.

A new book that offers new perspectives

These are just a few examples of Chinese people speaking out to advocate for more humanity and thoughtfulness. In China the number of people pausing to take stock, people who after 40 years of rapid economic development are searching for more meaningfulness in life and a greater focus on humanity, is rising. Lee is one of them, as demonstrated by the closing line of his book, quoted at the beginning of this article.

Lee has written a cautionary book which illustrates the drastic social consequences that future AI applications will have. It is a very personal book which allows us to witness a radical shift in one man’s life, and which reminds us of what is truly important. Lee tears down the cultural barriers between China and the United States, providing the Western reader with insights into how Chinese companies tick and what Chinese business culture looks like from the point of view of an AI expert who is very much at home in both the West and China. A highly recommended read!


Kai-Fu Lee: AI Superpowers. China, Silicon Valley and the New World Order.

Houghton Mifflin Harcourt (September 2018)
Hardcover: 272 pages
Language: English (also available in German)
$ 26.00

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