China-US AI investment gap narrower than figures suggest: report

The AI investment race between China and the US is closer than headline figures suggest, even though the technology is expected to make a greater contribution to economic growth in America, according to a Chinese think tank.

The findings come as artificial intelligence becomes a focal point of technological competition between Beijing and Washington, with investment levels, computing power and the commercial applications of AI all under greater scrutiny.

According to a report released recently by a research team affiliated with China Finance 40 Forum, in terms of capital expenditure by major technology firms – a common metric for gauging AI investment – China will spend about one-eighth as much as the United States this year.

But the report argued that comparison gave an incomplete picture.

China’s total domestic AI-related spending was projected to reach about US$220 billion this year, comprising US$160 billion in capital expenditure and US$60 billion in model training and inference, it estimated. With US spending projected to reach US$840 billion, that put China’s investment at about one-quarter of the US level.

“The gap in AI investment between China and the US is real, but should not be measured simply by the capital spending of major technology companies,” the report said.

However, it said the disparity was much wider when it came to AI’s contribution to economic growth.

The report, which was released on Sunday, said rising investment by major US cloud providers was projected to contribute nearly 1.3 percentage points to US gross domestic product growth this year. In contrast, growth in AI-related capital expenditure across all Chinese companies was expected to add less than 0.4 percentage points to China’s GDP.

“AI has become an important driver of economic growth in the US, while its contribution to China’s economic growth remains relatively limited,” it said.

People’s Daily, the mouthpiece of the ruling Communist Party, called last month for greater public confidence in the country’s AI trajectory after claims circulated online suggesting the country was failing to use AI for productive purposes.