Even if China Cracks Down on Tech, AI Companies Plan IPOs

The motives behind the government’s action are complex. Officially, it is designed to prevent anti-competitive practices, save private data, and address income inequality or “capitalist excess.” But it also brought powerful businesses closer to the Communist Party line.

“If Alibaba, Tencent, and JD.com are worth billions or even trillions of dollars and even though they are not under the direct control of the Party, this is a new and unprecedented reality that China has never experienced. historically, “he said. Zhiwu Chen, a professor of economics at the University of Hong Kong.

Many experts describe the moves as a form of punitive industrial policy — an effort to guide China’s technology industry into areas seen as important to economic growth and geopolitical advantage. “Companies that are in hard technology, such as advanced machine building, computer chips, biotech, and defense — industries that are really behind China — are not affected,” Chen said.

That helps explain why AI companies are so quickly lost to this day. “AI is of greater economic importance,” MIT Beraja said. “It has been repeatedly referred to by Chinese officials as a ‘strategic industry.'”

The belief that AI can contribute to the growth of many industries is expressed in a national-scale plan published by the State Council of China in 2017. The plan spurred widespread AI investment by regional governments. Other AI companies have also benefited from government data, including images used to create and sharpen facial recognition systems.

Minyuan Zhao, an associate professor at Washington University in St. Louis. Louis who studies business in China, argues that AI companies are just as crosshairs as anyone, but they are tightly tied to the government. “There’s a little bit of concern for loss of control,” he said.

Graham Webster, a Stanford research scholar who specializes in China, says the country’s new Personal Information Protection Act tighten the rules for all companies that handle personal information, including AI companies that sell facial recognition technology.

SenseTime warns potential investors that data regulations can be a headache. “It remains uncertain whether the proposed measures will apply to our business” or whether other changes could impose restrictions, the prospectus said.

In some sense, Beijing’s cracking of personal information could serve to strengthen the government’s relationship with the companies with which it shares the data, if it helps build public confidence in the idea that personal information is kept secure.

It may not prevent AI companies from further restrictions or regulations indefinitely, though.

“AI is a new field,” he said Yun Sun, a director of the China Program at the Stimson Center think tank. “It is possible that regulators do not yet fully understand the scope of data security involved,” he said. “There is a pattern of government reaction to such IPOs when the industry is more mature, there are more actors, and regulation becomes problematic.”

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