WEBVTT - Kai-Fu Lee on the Great Game to Dominate Data

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<v Speaker 1>For all the focus on deficits and tariffs, you might

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<v Speaker 1>think economic ties between the US and China are just

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<v Speaker 1>about how much stuff is put on a ship, how

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<v Speaker 1>much it costs, where it's made, and where it's going.

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<v Speaker 1>You would be mistaken. The future belongs to data, not merchandise,

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<v Speaker 1>and the world economy is a duopoly. America and China

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<v Speaker 1>own it. Welcome to Benjamin, a show about the global econome.

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<v Speaker 1>I'm Daniel Moss, columnist at Bloomberg Opinion in New York.

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<v Speaker 1>A few people are as familiar with both the viewers

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<v Speaker 1>and China as Kai Fu Lei. Born in Taiwan, Doctor

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<v Speaker 1>Lee has spent his career straddling Silicon Valley the tech

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<v Speaker 1>precincts of Beijing. He used to run Google China and

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<v Speaker 1>now leads sign Ovation Ventures, a firm that focuses on

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<v Speaker 1>developing the next big thing. Along the way, he had

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<v Speaker 1>a personal crisis that further sharpened his insights. Dr Lee

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<v Speaker 1>is the author of Ai Superpowers, China, Silicon Valley, and

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<v Speaker 1>the New World Order. It's probably the business book of

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<v Speaker 1>the moment. Dr leeh thanks for joining us, and thanks

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<v Speaker 1>for not putting the word disruption in the title. Thank you.

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<v Speaker 1>It's great to talk to you. I've heard you describe

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<v Speaker 1>China as the new Saudi Arabia and data as the

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<v Speaker 1>new oil. What did you mean by that and how

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<v Speaker 1>does that capture the essence of this moment? Sure? The

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<v Speaker 1>way are the official intelligence or AI works today is

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<v Speaker 1>that within this single application, when an AI algorithm is

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<v Speaker 1>trained down a huge amount of data with corresponding labels,

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<v Speaker 1>it can then make decisions in that domain at a

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<v Speaker 1>superhuman accuracy. So the more the data, the better. So

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<v Speaker 1>the system is not programmed by humans to do make decisions,

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<v Speaker 1>but it learns from data. And the amount of data

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<v Speaker 1>that's needed is is huge. So today China has the

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<v Speaker 1>most data in the world and that gives a certain

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<v Speaker 1>advantage to China. Now, technology, business, and economic literature has

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<v Speaker 1>been gushing about artificial intelligence for a while. What's changed.

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<v Speaker 1>I think the biggest change was that ten years ago

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<v Speaker 1>a new technology called deep learning was invented and it

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<v Speaker 1>was applied in many many domains, and starting about six

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<v Speaker 1>years ago, we began to see its efficacy in face

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<v Speaker 1>wreck cognition, later speech recognition, later the game of Go,

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<v Speaker 1>and almost all subsequent technologies were built on this deep

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<v Speaker 1>learning or associated technologies. So that was the single big

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<v Speaker 1>breakthrough that became clear to the researchers about six years ago,

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<v Speaker 1>but to the rest of the world about two and

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<v Speaker 1>a half years ago when Alpha go emerged, and this

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<v Speaker 1>technology coincided with the rapidly increasing amount of data because

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<v Speaker 1>deep learning is a very deep network with potentially billions

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<v Speaker 1>of parameters to train, so it was hungry for data.

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<v Speaker 1>So the accessibility and growth of Internet data alongside with

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<v Speaker 1>that the development of deep learning together created never before

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<v Speaker 1>seeing accuracy in all kinds of tasks that deep learning

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<v Speaker 1>plus large data tackles. Can you put this in the

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<v Speaker 1>context of economic history for the past couple of centuries?

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<v Speaker 1>Where does this rank in the period that began with say,

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<v Speaker 1>the Industrial Revolution in the United Kingdom? Okay, I think

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<v Speaker 1>AI should definitely rank among the Industrial Revolution, in particular

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<v Speaker 1>with the steam engine, electricity, and perhaps the internet computer revolution.

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<v Speaker 1>These probably are the top three or four in my

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<v Speaker 1>personal opinion. It will end up proven to be number one,

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<v Speaker 1>but of course that remains to be seen. Does the

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<v Speaker 1>industrial and economic map of the world now resemble something

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<v Speaker 1>from the nine century but instead of European powers gobbling

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<v Speaker 1>up territory in Africa and Asia, China in the United

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<v Speaker 1>States carving up the technology world. What does that map

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<v Speaker 1>look like today? I think if we take a snapshot

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<v Speaker 1>right now, US is still has the upper hand with

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<v Speaker 1>American technologies penetrating developed countries and some developing countries, and

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<v Speaker 1>China is largely still within China, with a little bit

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<v Speaker 1>of penetration into other countries. But we're seeing a rapidly

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<v Speaker 1>increasing pace that Chinese technology companies, and that's primarily mobile

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<v Speaker 1>apps and AI companies going from China to Southeast Asia,

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<v Speaker 1>Middle East, and Africa. They're just at the beginning, so

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<v Speaker 1>it's too early to tell the final results. But given

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<v Speaker 1>that the American giants have largely ignored those regions. Um

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<v Speaker 1>as you add India also, since that's generally separate from

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<v Speaker 1>the Southeast Asia, US is generally not paid too much

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<v Speaker 1>attention to those four regions. I think it gives China

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<v Speaker 1>an opportunity to go into these four regions. And in addition,

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<v Speaker 1>the Chinese demographics may match those regions better than the US,

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<v Speaker 1>so the products may be more attractive. And coincidentally, it

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<v Speaker 1>also matches the Belt Road initiative from China. So I

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<v Speaker 1>think the developed countries will end up continuing to be

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<v Speaker 1>a stronghold of American dominance in technology. But I think

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<v Speaker 1>most of the rest of our world would potentially have

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<v Speaker 1>a high degree of Chinese penetration, probably not as strong

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<v Speaker 1>as US in the developed countries, but let's say a

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<v Speaker 1>more than fifty percent penetration or dependency on Chinese technologies.

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<v Speaker 1>Over let's say the next five to ten years. So

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<v Speaker 1>broadly speaking, the US would have Western Europe, Canada, and Japan,

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<v Speaker 1>and China would have the rest, probably not quite I

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<v Speaker 1>think um. I think the US would have nearly total

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<v Speaker 1>penetration of most of, if not all, of Europe, Canada, Australia,

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<v Speaker 1>and Japan, and possibly some of South America and a

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<v Speaker 1>little bit at the rest of the world. And China

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<v Speaker 1>would have all of China and more than fifty of India,

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<v Speaker 1>Southeast Asia, Middle East, and Africa. The trade disputes between

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<v Speaker 1>the United States and China, which dominate much of the

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<v Speaker 1>public discourse in America these days, that principally about merchandise trade,

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<v Speaker 1>about deficits, about the cost of production. That seems to

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<v Speaker 1>be a completely different conversation from that of the world

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<v Speaker 1>that you're inhabiting. Well to be fair. There's also intellectual property,

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<v Speaker 1>which I think is crosses both. I do agree that

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<v Speaker 1>the trade disputes are include the intellectual property don't affect

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<v Speaker 1>um our area, which is AI mobile software. But some

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<v Speaker 1>of those issues certainly do affect semiconductor PC UM mobile

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<v Speaker 1>phones and so on, which are very much related to

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<v Speaker 1>the area as we invest in now. You were born

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<v Speaker 1>in Taiwan, you came to the United States as a

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<v Speaker 1>small boy to Tennessee. You've worked in the Valley, You've

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<v Speaker 1>worked for an American company in China, you have your

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<v Speaker 1>own venture capital firm. As a student of the United

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<v Speaker 1>States and the economic and technological currents, what from your perspective,

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<v Speaker 1>is going on in this country right now? How would

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<v Speaker 1>you define this moment? Do you mean the technology development

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<v Speaker 1>or the trade disputes? If you've wrapped up the overall

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<v Speaker 1>vibe in America right now compared with previous visits, from

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<v Speaker 1>the time you were growing up, from the time you

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<v Speaker 1>were a student at university, here, what's changed in this

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<v Speaker 1>country and why? I think in Silicon Valley not much

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<v Speaker 1>has changed. There has been and still is a very

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<v Speaker 1>strong self confidence that it is the center of the world.

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<v Speaker 1>The rest of America is beginning to realize that there

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<v Speaker 1>is an alternate technological force emerging that's called China. And

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<v Speaker 1>I think the Silicon Valley centric view is potentially dangerous

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<v Speaker 1>because it is a great view. It is a great

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<v Speaker 1>way to develop products, but China has proven that it

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<v Speaker 1>is not the only way. So it would be wise

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<v Speaker 1>to consider at least the two alternate ways that great

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<v Speaker 1>innovative products can be developed. And in terms of overall sentiment,

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<v Speaker 1>I think I sense more divisiveness in America. I think

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<v Speaker 1>before there was a much greater unity, and I think

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<v Speaker 1>there is um more disagreements today, and I think there

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<v Speaker 1>are it feels like they're more uncertainty, but the economy

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<v Speaker 1>is good and the people feel confident about the American technologies. Yeah,

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<v Speaker 1>that's basically what I see. How profoundly did your brush

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<v Speaker 1>with cancer effect your perspective? Very very profoundly. In my

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<v Speaker 1>first fifty plus years of my life, I've I've really

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<v Speaker 1>was a workaholic, and I felt work was the center

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<v Speaker 1>of my life. And family was UM a set of

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<v Speaker 1>people I depended on, but I gave them time as

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<v Speaker 1>I could afford from my work. UM gave enough times

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<v Speaker 1>so that they tolerate my lack of attention. But as

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<v Speaker 1>I found out that I had cancer, I realized that

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<v Speaker 1>all the accomplishment really meant nothing, and that, like most

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<v Speaker 1>people facing the possibility of death, I realized that what

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<v Speaker 1>was important in life was first and foremost to love

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<v Speaker 1>and give love back to the people who love me,

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<v Speaker 1>and secondly, to follow the things and do things that

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<v Speaker 1>I am passionate about. And that's very consistent across thousands

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<v Speaker 1>of people facing death, and I think there's a lot

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<v Speaker 1>of wisdom in people facing death. So fortunately, I'm now

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<v Speaker 1>in remission and when I now come back to work,

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<v Speaker 1>I no longer put work as my only priority, and

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<v Speaker 1>when my kids come home, I actually just don't work,

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<v Speaker 1>and it's a reversal of what I used to do.

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<v Speaker 1>I still spend a lot of hours working less than before,

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<v Speaker 1>but it's a matter of priorities. It's a matter of

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<v Speaker 1>finally realizing what was important. And it also made me

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<v Speaker 1>realize that workaholism is something that haunts both the Americans

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<v Speaker 1>and the Chinese, and that there really is more to

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<v Speaker 1>life than work. So in some sense, uh, as we

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<v Speaker 1>enter the era of AI, I think AI is here

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<v Speaker 1>to relieve us from a lot of redundant or repetitive

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<v Speaker 1>or routine work that we're doing, giving us a lot

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<v Speaker 1>more time back to us so that we can give

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<v Speaker 1>time to the people who love us, We can do

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<v Speaker 1>the things that we are passionate about, and and we

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<v Speaker 1>can have time to think about the real meaning of life,

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<v Speaker 1>which is definitely not work. In keeping with that, what

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<v Speaker 1>does this new technological world order main for the future

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<v Speaker 1>of work? Because AI is capable of doing single, distinct

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<v Speaker 1>tasks much better than people, that means we don't have

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<v Speaker 1>to be threatened that AI will become robot overlords ruling

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<v Speaker 1>over us because there are tools that we control. On

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<v Speaker 1>the other hand, if they can do single tasks better

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<v Speaker 1>than us, there are many people who do jobs that

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<v Speaker 1>are composed of a number of single tasks. That means

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<v Speaker 1>those jobs will be displaced by AI, either one on

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<v Speaker 1>one or through industry disruption. So in terms of the

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<v Speaker 1>future of work, I'm quite concerned that a certain percentage

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<v Speaker 1>of jobs that are not requiring the most creativity and

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<v Speaker 1>not requiring the greatest human touch and interaction, those kinds

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<v Speaker 1>of routine jobs will be replaced by AI, and that

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<v Speaker 1>the time has come for us to plan to real

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<v Speaker 1>to reskill the people in those jobs, and while we

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<v Speaker 1>still have time to create jobs that can be both

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<v Speaker 1>satisfying and reasonably play paying, so that people can move

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<v Speaker 1>on to the next steps in their lives rather than

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<v Speaker 1>just to see AI take over one type of job

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<v Speaker 1>after another, Doctor Lee. You're probably familiar with some of

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<v Speaker 1>the criticism that's made of Northern California and in some

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<v Speaker 1>ways the state in general, that the scene is to uniform,

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<v Speaker 1>there's too much group think, it's a one party state,

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<v Speaker 1>and it's lost its age. What's your perspective on that

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<v Speaker 1>about California, about Silicon Valley California in general, versus what

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<v Speaker 1>you're seeing when you hang out in the tech precincts

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<v Speaker 1>of Beijing. Well, I am very conflicted because at the

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<v Speaker 1>same time, I have tremendous respect of the vision that's

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<v Speaker 1>come out of Silicon Valley, that has led the world

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<v Speaker 1>for the last thirty years, and that still has many

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<v Speaker 1>of the world's most amazing companies and startups. But I

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<v Speaker 1>I'm also at the same time concerned that the success

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<v Speaker 1>has created some degree of self entitlement and maybe even

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<v Speaker 1>a little bit of hubris, the feeling that the world

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<v Speaker 1>revolves around Silicon Valley. They belief that um only the

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<v Speaker 1>companies there matter, the belief that only Silicon Valley innovates,

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<v Speaker 1>and only the method of Silicon Valley that matters when

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<v Speaker 1>it comes to innovation. And I think that is myopic.

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<v Speaker 1>And if if we, if Americans all really believe that,

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<v Speaker 1>then it would be missing all the exciting things happening

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<v Speaker 1>in China. Chinese model of innovation is different. It's heavier,

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<v Speaker 1>it's building impregnable business models that actually are more built

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<v Speaker 1>to last, but maybe less visionary and technically exciting. I

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<v Speaker 1>think as citizens of this world, we should all be

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<v Speaker 1>hum ball and study different types of innovation and be

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<v Speaker 1>open to different models. And if Silicon Valley continues to

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<v Speaker 1>only look within and not accept external innovation, then it

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<v Speaker 1>will be missing half of the teaching materials for the

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<v Speaker 1>young people in Silicon Valley. That I can assure you

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<v Speaker 1>that the young people in China are studying humbly both

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<v Speaker 1>the successes in the US, the Googles and facebooks and

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<v Speaker 1>the successes from China the Ali Baba's and made Twins

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<v Speaker 1>and ten cents, and that gives a more robust set

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<v Speaker 1>of instructions, if you will, for the Chinese entrepreneurs that

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<v Speaker 1>there's no reason American entrepreneurs should um keep the blinders

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<v Speaker 1>on and throw away half of the instructions that could

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<v Speaker 1>be so helpful to their growth as entrepreneurs. What role

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<v Speaker 1>should the state play in this? I was fortunate enough

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<v Speaker 1>to be at an event last month with Audrey Tongue,

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<v Speaker 1>Taiwan's Digital minister, whom you probably know. Uh. That was

0:18:09.160 --> 0:18:14.600
<v Speaker 1>a very special experience. It should China and the United

0:18:14.640 --> 0:18:18.639
<v Speaker 1>States each have a digital affairs minister like Audrey Tongue.

0:18:20.040 --> 0:18:23.879
<v Speaker 1>I'm not sure. I think UM, whatever role is called

0:18:24.359 --> 0:18:29.720
<v Speaker 1>chief technical officer, chief Digital officer, chief AI officer, that

0:18:29.960 --> 0:18:34.280
<v Speaker 1>role has to be empowered in order to be impactful

0:18:34.680 --> 0:18:39.600
<v Speaker 1>for any country. I think what's perhaps more important is

0:18:39.760 --> 0:18:44.520
<v Speaker 1>to let private enterprises do what they do best. That is,

0:18:44.720 --> 0:18:49.840
<v Speaker 1>let private capital invest in private companies to build companies,

0:18:50.280 --> 0:18:53.360
<v Speaker 1>and to the extent that they're successful in getting users,

0:18:53.359 --> 0:18:56.600
<v Speaker 1>in generating revenues and profits, they will get more money

0:18:56.640 --> 0:19:01.399
<v Speaker 1>and then potentially be listed publicly under to success. But

0:19:01.520 --> 0:19:05.919
<v Speaker 1>the role of governments is really to provide the types

0:19:05.960 --> 0:19:11.639
<v Speaker 1>of infrastructure that private companies cannot do, and to have

0:19:12.600 --> 0:19:17.480
<v Speaker 1>really as open as possible technical policies that let new

0:19:17.520 --> 0:19:23.480
<v Speaker 1>technologies have a chance to perhaps grow faster and potentially

0:19:23.520 --> 0:19:29.600
<v Speaker 1>even disrupt traditional UM technologies. I think it is that's

0:19:29.760 --> 0:19:34.200
<v Speaker 1>openness and infrastructure building UH that will ensure the country

0:19:34.400 --> 0:19:39.239
<v Speaker 1>moves forward. China does a reasonably good job on both UH.

0:19:39.359 --> 0:19:43.720
<v Speaker 1>Infrastructure building would be examples like building a new highway

0:19:43.840 --> 0:19:47.119
<v Speaker 1>for autonomous driving or even a new city the size

0:19:47.119 --> 0:19:52.320
<v Speaker 1>of Chicago for autonomous driving. And as far as open

0:19:52.359 --> 0:19:56.480
<v Speaker 1>policies would be the example of letting the Chinese software

0:19:56.480 --> 0:20:02.240
<v Speaker 1>companies develop payment so much so that these up mobile

0:20:02.280 --> 0:20:07.439
<v Speaker 1>payments have squeezed out cash as well as credit cards

0:20:07.800 --> 0:20:12.960
<v Speaker 1>from almost into obsolescence. So these are the kinds of

0:20:13.000 --> 0:20:17.120
<v Speaker 1>examples that has pushed China ahead to the extent possible.

0:20:17.359 --> 0:20:21.720
<v Speaker 1>I think other countries can try to build similar infrastructures

0:20:21.760 --> 0:20:27.000
<v Speaker 1>and have such open mindedness about technology, otherwise there would

0:20:27.040 --> 0:20:32.639
<v Speaker 1>be risks of falling behind. I attended your Asia Society

0:20:32.680 --> 0:20:36.199
<v Speaker 1>event in New York October one, and I have to

0:20:36.240 --> 0:20:40.040
<v Speaker 1>admit to being surprised to see you in an extremely smart,

0:20:40.560 --> 0:20:45.000
<v Speaker 1>well tailed three piece suit with an immaculate tie. I

0:20:45.080 --> 0:20:47.800
<v Speaker 1>don't think it was many people's vision of what a

0:20:47.880 --> 0:20:50.920
<v Speaker 1>tech guru would look like. Where had you just been

0:20:52.680 --> 0:20:55.320
<v Speaker 1>I knew I was going to the Asia Society. I

0:20:55.359 --> 0:21:00.199
<v Speaker 1>was going to greet many people who wear suits and tie. Um,

0:21:00.440 --> 0:21:03.720
<v Speaker 1>but to be fair, I do wear a certain tie

0:21:04.200 --> 0:21:08.400
<v Speaker 1>quite often and that's my prefer attire. Dr Lee, thank

0:21:08.440 --> 0:21:12.520
<v Speaker 1>you so much for joining us, and congratulations on the book. Okay,

0:21:12.520 --> 0:21:25.280
<v Speaker 1>thanks so much. Benchmark will be back next week. Until then,

0:21:25.320 --> 0:21:29.360
<v Speaker 1>you can find us on the Bloomberg terminal, Bloomberg dot com,

0:21:29.359 --> 0:21:33.480
<v Speaker 1>our Bloomberg app, as well as podcast destinations such as

0:21:33.520 --> 0:21:38.439
<v Speaker 1>Apple Podcasts, Spotify, or wherever you listen. We'd love it

0:21:38.720 --> 0:21:40.720
<v Speaker 1>if he took the time to rate and review the

0:21:40.760 --> 0:21:44.520
<v Speaker 1>show so more people can find us. You can follow

0:21:44.600 --> 0:21:50.160
<v Speaker 1>me on Twitter at moss underscore E. Benchmark is produced

0:21:50.160 --> 0:21:55.000
<v Speaker 1>by tofa Foreheirs. The head of Bloomberg Podcasts is Francesco Leaving.

0:21:55.560 --> 0:22:00.760
<v Speaker 1>Thanks for listening. See you next time. It was not

0:22:01.200 --> 0:22:03.720
<v Speaker 1>the Boy