Why China Has An Edge In the A.I. Arms Race

Facial-recognition technology, driven by artificial intelligence, is in increasingly wide use in China. Here, a screen supported by a facial-recognition system displays the image of a jaywalker at an intersection in Nanjing.
Students can use this interface to pay for their meals at the No. 11 Middle School in Hangzhou.
Paying for a subway trip in Guiyang
Twin sisters try out Alipay's
A Shenyang City
A customer (at left, in blue shirt) prepares to pay for a purchase using facial recognition at a clothing store in Nanjing.
A Hangzhou hotel uses visual matching to allow guests to enter their rooms without a key card.

STEP ASIDE, SHERLOCK. Detectives in China say they can catch criminals using artificial intelligenceā€”and if you donā€™t believe them, consider the case of the potato thief at the pop concert.

Officials in the eastern Chinese city of Jiaxing in May used A.I.-powered facial-recognition technology to nab the alleged tater taker from a crowd of more than 20,000 people attending a performance by Hong Kong crooner Jacky Cheung. Moments after passing through the concertā€™s security system, the unsuspecting suspect was busted: An algorithm matched his face with an image from a database of ā€œmost wantedā€ mug shots. Authorities seized the man on charges of stealing $17,000 worth of potatoes.

The thief was the third fugitive to be arrested at a Jacky Cheung concert in as many months using software developed by Beijingā€™s Megvii, among the many Chinese groups pioneering ways to combine A.I. and facial-recognition capabilities. Alibaba Group mobile payments affiliate Ant Financial uses a ā€œsmile to payā€ feature to facilitate purchases at KFC. A high school in Hangzhou monitors studentsā€™ attentiveness in class. Traffic police in Shenzhen and other cities spot jaywalkers and reckless bike couriers. A park near Beijingā€™s Temple of Heaven uses the technology in a public restroom to stop patrons from stealing toilet paper.

All of this hints at the extraordinary zeal with which the worldā€™s second-largest economy has embraced A.I. President Xi Jinping vows China will become the global leader in artificial intelligence by 2030, creating a domestic industry worth nearly $150 billion.

Should the rest of the world be alarmed by Chinaā€™s A.I. dreams? Perhaps not. Implicit in most assessments of the countryā€™s efforts, whether by U.S. officials or Chinese analysts, is the shared assumption that the programs will perform as advertised. Though Xi has certainly stepped up support for state-owned enterprises, tightened restrictions on foreign firms, and doled out massive subsidies to key sectors, his countryā€™s future A.I. supremacy is far from guaranteed. ā€œMany of the challenges of A.I. are global in nature,ā€ reads a June report from McKinsey on the subject, and ā€œnot for government to solve alone.ā€

Kai-Fu Lee, the former head of Google China, argues that A.I. is shifting from a U.S.-led Age of Discovery to an Age of Implementation in which China enjoys significant ā€œstructural advantages.ā€ The main drivers? Data, computing power, and competent engineersā€”all of which favor the worldā€™s most populous nation.

Yet proponents of artificial intelligence warn that it could wipe out millions of jobs, a troubling prospect in a country that remains so heavily dependent on repetitive manufacturing jobs. How will China cope? Deep learning, it seems, can also raise deep questions.

A version of this article appears in the July 1, 2018 issue of Fortune with the headline ā€œā€™Black Mirror,ā€™ Slightly Broken.ā€