Will being "banned" by OpenAI help China's AI industry break through?

OpenAI, the American artificial intelligence (AI) giant, announced that it will block users in China from using its AI tools and software, causing concern in the country's technology community.

However, many experts believe that this "ban" move will be the driving force for a "major reform" in the Chinese AI industry, strongly promoting the country's domestic AI models.

Little impact on users

According to OpenAI's announcement, starting July 9, the company will stop its Application Programming Interface (API) in China, prohibiting Chinese users and developers from accessing its large language model (LLM).

A fierce battle for customers broke out after the news broke. Several Chinese LLM developers including Baidu, Tencent, and Alibaba were quick to respond with free migration services for affected businesses and developers. Some even took the opportunity to slash prices and lower the threshold for using LLM for businesses.

Associate Professor James Pang at the National University of Singapore (NUS) said that alternative platforms may not match OpenAI in terms of performance, but they still have the advantage of seamlessly integrating with applications and solutions developed by domestic vendors.

“Existing OpenAI users can easily migrate to China’s LLM platform and can even directly use the open source platform to continue their operations. Ultimately, the restrictions will not have a major impact on customers,” Pang said.

OpenAI is the developer of ChatGPT, a chatbot that went viral in late 2022. ChatGPT's launch has attracted widespread attention in China, with many tech companies launching their own LLM programs over the past year.

According to the Cyberspace Administration of China website, as of March 2024, China has licensed 117 domestic LLM programs.

Eliminate rogue AI

To quickly launch AI products or services, some underfunded companies have used a “shell” strategy. That is, they ostensibly market their AI services as being developed by LLM themselves, but in reality, all end-user interactions with those AI products are done through OpenAI.

Associate Professor Zhu Feida of Singapore Management University (SMU) pointed out that OpenAI's restrictions will help eliminate some "fake LLM developers" and enterprises lacking independent research, and speed up the survival of China's strongest brands in the AI ​​industry.

“The restrictions (on OpenAI) actually help the Chinese government to filter out real AI companies from fake ones,” Zhu said. “The restrictions will force companies that rely on OpenAI’s LLM to self-examine and build real technological expertise. This is crucial for them to truly contribute to China’s AI development.”

China will soon catch up with the US

OpenAI's restrictions come as the US puts pressure on China to block its access to cutting-edge AI and chip technology.

Associate Professor Zhu Feida pointed out that OpenAI's restrictions are strategically aimed at hindering China's LLM training, similar to how the US imposed export restrictions on advanced AI chips to prevent China from developing AI computing power.

However, according to Zhu, AI computing power depends not only on chips but also on stable power supply. With the continuous improvement of AI technology and the continuous expansion of related application fields, the problem of high energy consumption for LLM technology is becoming more and more obvious, and power supply has become a major limiting factor for AI development.

Reports suggest that ChatGPT can use more than 500,000 kilowatt-hours of electricity per day to meet the needs of more than 200 million users, meaning it consumes 17,000 times more electricity than the average household.

Zhu believes that with the pace of AI development, the US power supply will soon be stretched to its limits. On the contrary, China has advantages in power development, especially in the field of new energy power generation as well as the technology and comprehensive supply chain for battery energy storage.

“Although China cannot currently compete with the US in AI computing power, it is only a matter of time before it catches up. China’s advantage in new energy power generation will become more and more prominent in the coming stages of AI development,” Zhu said.