Not to forget about AI opportunities that lie ahead in China!

Key Comments

• With investor’s focus surrounding OpenAI ChatGPT’s significant traction and quick surpassing of 100mn users globally in just two months, it is important not to forget about the AI opportunities that lie ahead in China.
   
• Harvard Economics Professor David Yang spoke to the outsized success of China’s AI sector. As evidence, he cited a recent U.S. government ranking of companies producing the most accurate facial recognition technology. The top five were all Chinese companies. “Autocratic governments would like to be able to predict the whereabouts, thoughts, and behaviours of citizens,” Yang said. “And AI is fundamentally a technology for prediction.” Because AI heavily depends on data, and autocratic regimes are known to collect vast troves of it, this advantages companies with Chinese government contracts, which can turn around and use state data to bolster commercial projects, he added.
   
• A number of AI Generated Content (“AIGC”) use-cases are already seen in China, including AI-generated merchandise descriptions and advertisements based on product images, where it is expected to extend to a wide array of to-B and to-C usage scenarios, including search, retail, education, transportation, etc. in the coming years.
   
• On the other hand, Chinese government unveiled firm policy support for digitalization, which is an integral part of AI development. China also announced a new programme to promote AI in science and technology research. The project will focus on key fields, like drug development, gene research and biology, while strengthening guidance.
   
• Here’s a summary of key China internet coverage’s positioning from the aspects of AI chips, deep learning, AI models, etc and their respective latest announcements and product launch plans across the mega-caps:
  
  
• While AI could be applied anywhere, everywhere, it might be difficult to keep track of the China Internet companies’ initiatives and positioning towards generative AI and ChatGPT-like products. Here’s why this China AI Basket Index offered by GS could be a good reference point. It consists of China A and HK companies that are pursuing and implementing AI. The basket constituents include the three major types of player throughout the AI industry chain:
  • AI Infrastructure – Semiconductor, Integrated Circuit
  • AI Development – AI Platform, IT Service Provider
  • AI Application – Computer Vision, Natural Language

Components are as follows:

 

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• The product is only principal protected if investors hold it until maturity date.
• The product is subject to market volatility and the issuer’s credit risk.
• In the worst-case scenario, investors may experience a total loss of capital in the event of issuer’s default.

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