China still not leading in AI innovation despite $6B+ in startup funding

Contrary to popular perceptions, while much leading-edge innovation involving AI is coming out of China, the advances emanating from the Middle Kingdom are limited to just a few platform technologies and market segments.

That’s according to Lux Research, which places the observation in the context of Chinese AI startups having received $6.1 billion in funding—nearly 70% more than U.S. AI startups—over the last four years.

“Although funding data make China appear to be a global leader in AI, the funding raised by Chinese AI startups is significantly concentrated in the technologies of computer vision and natural language processing,” Lux analyst Jerrold Wang and colleagues write in a report titled “Will China Take Over the Global AI Industry?”

The team arrived at its findings after analyzing China’s AI patents and research papers as well as venture capital investments in several major AI categories. These included fundamental AI, voice recognition, AI processors and edge computing.

“China has published more AI-related patents and papers than any other country in the world,” Wang writes in a Sept. 23 blog post summarizing the report. However, “deeper analysis indicates that it is still not leading the world when it comes to developing truly innovative technologies.”

Moreover, healthcare AI doesn’t seem to be an especially keen interest to developers in China. Instead, Wang observes, China’s AI companies are concentrating on only a few market segments—namely finance, retail and government.

“Chinese AI companies will struggle to penetrate U.S. and European markets because they lack clear technology advantage over the leading local peers,” Wang writes, “and their expertise in covering some Chinese market segments cannot be leveraged to cover the foreign market.”