Chinese billionaire investor Xia Zuoquan, co-founder of electric vehicle maker BYD, has expressed doubts about China’s ability to develop groundbreaking technologies on par with OpenAI’s ChatGPT. Xia stated that China’s lack of fundamental research and a mature capital market are obstacles to technological breakthroughs.
Despite the enormous returns he earned from investing in BYD in 1995, Xia believes that China still lags behind in foundational aspects such as algorithms, chips, and key industrial software and hardware, which are predominantly American.
As the founder of technology investment firm Zhengxuan, Xia primarily focuses on hi-tech fields including advanced manufacturing, artificial intelligence (AI), robotics, new energy, and semiconductors. However, his firm remains cautious about investing in Chinese start-ups working on large language models (LLMs), the technology underlying services like ChatGPT.
Xia explained that the underdeveloped capital market in China makes it difficult for fundamentally innovative AI technologies to emerge in the short term. Most investment institutions and government-backed funds in the country are hesitant to invest billions of dollars or wait for more than a decade for these companies to succeed.
Chinese cybersecurity firm 360 Security Technology’s founder and chairman, Zhou Hongyi, also emphasized the need for caution regarding LLMs. He suggested keeping them separate from main business operations due to their perceived unreliability.
While investment interest in generative AI is high in China, Xia’s concerns shed light on the challenges faced by Chinese start-ups in the field. Though China saw the largest number of generative AI start-ups receiving funding in the first half of the year, the country’s capital market and risk aversion pose obstacles to the development of AI technologies.
On the other hand, the Chinese AI market continues to attract prominent figures. Venture capitalist Lee Kai-fu, former president of Google China, recently unveiled his new venture Lingyi Wanwu, which aims to develop its own LLM. Lee emphasized that LLMs present a historical opportunity that China should not miss, despite the risks associated with relying on open-source models built by foreign companies.
Overall, Xia’s apprehensions stem from the current limitations in China’s technological ecosystem. While investment in generative AI is prevalent, the lack of foundational research and risk aversion hinder China’s ability to produce breakthrough technologies in the short term. However, the industry continues to attract attention and investment from high-profile individuals like Lee Kai-fu, indicating the country’s ongoing interest in AI development.
