OpenAI’s Decision and Its Implications
Beginning Tuesday, US-based OpenAI will block application programming interface (API) traffic from countries and regions that are not on its supported list. This decision poses a challenge to certain domestic artificial intelligence companies but might also push these companies to focus more on innovation.
Impact on Chinese AI Startups
Quite a few AI startups in the Chinese mainland, which are “unsupported” by OpenAI, have been developing large language models (LLMs) or AI applications by integrating with the OpenAI API. Those might suffer from OpenAI’s blocking of data traffic. By doing so, OpenAI has effectively exited the mainland market, relinquishing the opportunity of training LLMs in the large market, thus providing domestic LLM companies an opportunity to accelerate their independent R&D and encouraging more startups to opt for domestically produced LLMs.
Comparative LLM Development in China and the US
China doesn’t lag far behind the US in terms of LLM development. Its developed LLMs account for 36 percent of the global total compared to the US’ 44 percent, according to the Global Digital Economy White Paper 2024 released by the Global Digital Economy Conference on July 2.
Despite the US leading in fundamental model research and development, China holds a strong position in the number of AI patents and the installation of industrial robots. In 2022, China accounted for 61.1 percent of the global AI patents, surpassing the 20.9 percent held by the US. The installation of industrial robots in China reached 290,300 units in 2022, which is 7.4 times the 39,500 units in the US at that time.
Narrowing the Gap Between the US and China
From all aspects, the gap between the US and China is not that huge. As startups in China will now have to turn to integrating with domestic LLM developers, there will be vast amounts of linguistic materials for the latter to train their models with. This leverages China’s advantage of a large, active population with access to the internet, speeding up the development of its AI sector.
OpenAI’s decision to block API traffic from unsupported regions presents both challenges and opportunities for Chinese AI startups. While these companies face the immediate hurdle of losing access to OpenAI’s tools, they are also being pushed towards greater innovation and reliance on domestic resources. China’s strong foundation in AI patents and industrial robot installations, combined with its substantial internet-using population, positions it well to make significant strides in AI development.
