Beijing Set to Transform Itself Into a Tech Capital

Beijing Set to Transform Itself Into a Tech Capital

People passing the shopping malls and offices in Zhongguancun, China, often referred to as China's Silicon Valley.

SourceMike Kemp/Corbis via Getty

Why you should care

Because China’s capital is reinventing itself in a massive bid to overtake the U.S. in the AI race.

Outside a small cafe down one of Beijing’s centuries-old hutongs (historic alleyways), collective frustration grows among customers as the internet connection, lackluster at its best, drops out for the third time in an hour. Patrons look to the heavens for help, past the bundles of half-exposed electrical and communications cables hanging limply overhead. None is forthcoming. It’s an issue that Beijingers deal with on a daily basis, but it gets no less frustrating with time.

But within 15 years, according to officials, the Chinese capital will be a leading light in technological modernization and a global hub for tech innovation. For those dealing with the constant headache of the city’s patchy internet service, the vision is hard to fathom. But China has brought about far greater transformations over shorter time spans, and there are plenty of signs pointing toward the realization of the city’s ambitions. Experts say the plan should be taken seriously.

The civic plan paints a picture of a livable, international and fully modernized Beijing — one that will be realized in the next decade.

An announcement earlier this year of a $2.1 billion development site dedicated to artificial intelligence on the western outskirts of Beijing is the crown jewel in the city’s plan. Reported to be capable of housing 400 enterprises, and with an estimated capacity of $7.7 billion in annual output, the development shows China’s willingness to aim for global leadership in a sector that experts generally agree the U.S. leads by a country mile.

But along with the AI park, Beijing is also taking other, less-heralded yet equally important steps toward realizing this goal. In fact, the foundations for the city to become an international AI hub were laid long before the new government initiatives. Many of China’s leading technology firms are currently based in Beijing. Zhongguancun, an area in the northwest of the capital that’s often referred to as “China’s Silicon Valley,” is home to a number of international tech giants, including Lenovo, Google and Microsoft. The area is also well-known for nurturing some of China’s leading tech startups.

Yi+, an AI company with offices in Singapore and San Jose, is headquartered in Zhongguancun. “Compared to other cities, as China’s capital city Beijing has a well-developed entrepreneurial environment and resource base,” says Mo Zhang, CEO of Yi+. “Zhongguancun is home to a large number of high-tech enterprises that help to promote mutual cooperation, prompting rapid growth of enterprises.”

As well as providing access to global tech leaders, Beijing is also home to a majority of the country’s leading schools and institutions, including the renowned Peking and Tsinghua universities, the Beijing Institute of Technology and the Chinese Academy of Sciences. Proximity to this potential talent pool gives Beijing an advantage over domestic rivals like Shenzhen. “Many of Yi+’s employees graduated from the Chinese Academy of Sciences and surrounding universities,” says Zhang. “Beijing is particularly rich in intellectual resources.”

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Zhongguancun, or Zhong Guan Cun, a technology hub in Haidian District, Beijing, China, is often referred to as China’s Silicon Valley.

Source Mike Kemp/Corbis via Getty

The substantial AI park investment shows the Chinese government’s long-term intent in AI innovation and opens the door to other policies supporting that growth. That’s important, because the government can do a lot — from funding workforce training and retraining and supporting talent acquisition and relocation to funding university R&D, tech transfer and better quality infrastructure, says Yujia He, a visiting fellow at the Atlantic Council’s Scowcroft Center for Strategy and Security. The government can also “provide tax rebates and investment incentives, and provide government-backed venture capital,” says He. These policies, she says, provide for an environment conducive to AI innovation and attract foreign investment, making government involvement the most important factor in China’s goal of AI dominance.

Expanding the AI sector is part of the wider vision of the capital laid out by city officials in late 2017. The civic plan paints a picture of a livable, international and fully modernized Beijing — to be achieved in the next decade. The two plans, while not necessarily coordinated, are certainly complementary.

But Beijing — and China — face challenges in fulfilling these ambitions. The building of relationships between Chinese firms and international universities and experts to nurture homegrown talent was specifically broached in a government plan mapping out the country’s AI ambitions released in 2017. Expanding these avenues of cooperation is one of the biggest hurdles China faces in becoming a global AI hub.

Sporadic examples of such agreements do exist. Yi+ has established a talent-sharing agreement with Singapore Nanyang Technological University, and Chinese AI startup SenseTime is planning to open a research and development center in the U.S. later this year. But for China, the road to success is potholed with contradictions.

Within days of the AI park announcement, reports surfaced that the government planned to conduct a massive crackdown on the use of VPNs by foreign companies, something officials have generally ignored in the past. This comes after months of tightened restrictions on foreigners working in the capital.

The heavy-handed approach of State Council officials toward foreign workers paints a less than welcoming picture for international talent. Foreign concerns over the relationship between the government and business in China remain prevalent, particularly in an industry with potential military applications.

But overall, the Chinese government’s long-term commitment gives the city’s AI industry a huge competitive advantage over the U.S., where the federal government is slow to fill science advisory positions and reluctant to fund science research. “Private industry [in the U.S.] may not be able to fill the gap,” says He.

From free trade to climate change, China is already claiming global leadership at a time the U.S. under the Trump administration is looking inward. With government funding and policy support, China is now eyeing a day when Silicon Valley may well be referred to as “America’s Zhongguancun.”

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