Even as China cracks down on technology, AI companies plan initial public offerings

The motives behind government action are complex. Formally, it is designed to reduce anti-competitive practices, secure private data, and address income inequality or “capitalization”. But it also brings powerful companies closer to alignment with the Communist Party.

“When Alibaba, Tencent and are worth billions or even trillions of dollars and yet are not under the direct control of the party, this is an entirely new and unprecedented reality that China has never experienced in history,” Qiu ChenProfessor of Economics at the University of Hong Kong.

Many experts describe these steps as a kind of punitive industrial policy — an attempt to steer China’s tech industry toward areas seen as vital to economic development and geopolitical advantage. “Companies in challenging technology, such as advanced manufacturing of engines, computer chips, biotechnology, and defense — industries that China really lags behind — have not been affected,” Chen says.

This could help explain why AI companies have fallen so slightly so far. “Artificial intelligence is of general importance to the economy,” says Braga of the Massachusetts Institute of Technology. Chinese officials have repeatedly called it a ‘strategic industry’.

The belief that AI can contribute to progress across dozens of industries has been demonstrated in A plan at the national level It was published by the Chinese State Council in 2017. The plan sparked large-scale investment in artificial intelligence by regional governments. Some AI companies have also made use of government data, including images used to build and refine facial recognition systems.

Minyuan ChowLouis, an assistant professor at Washington University in St. Louis who studies Chinese business, argues that AI companies are in the crossfire like everyone else, but they are already closely linked to the government. “There is less concern about losing control,” she says.

Graham Webster, a Stanford University researcher who specializes in China, notes that the new country Personal Information Protection Law It will tighten the rules for all companies that handle personal information, including artificial intelligence companies that sell facial recognition technology.

SenseTime warns potential investors that data regulations may cause headaches. The prospectus says, “It remains uncertain whether the proposed actions will be applicable to our business” or whether other changes could impose restrictions.

In a sense, Beijing’s crackdown on personal information may strengthen the government’s relationship with the companies it shares data with, if it helps build public confidence in the idea of ​​protecting personal information safely.

However, this may not insulate AI companies from further restrictions or regulations indefinitely.

“Artificial intelligence is a relatively new field,” he says. Yoon Sun, director of the China Program at the Stimson Research Center. “It is possible that regulators may not yet fully understand the scope of data security involved,” she adds. “There is a pattern of government reaction to such IPOs when the industry is more mature, actors are plentiful, and regulation becomes an issue.”

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