We have already eliminated all jobs several times in human history. How many jobs circa1900 exist today? If I were a prescient futurist in 1900, I would say, “Okay, 38% of you work on farms; 25% of you work in factories. That’s two-thirds of the population. I predict that by the year 2015, that will be 2% on farms and 9% in factories.” And everybody would go, “Oh, my God, we’re going to be out of work.” I would say, “Well, don’t worry, for every job we eliminate, we’re going to create more jobs at the top of the skill ladder.” And people would say, “What new jobs?” And I’d say, “Well, I don’t know. We haven’t invented them yet.”
China's size advantage
Those of us in America trust that the Silicon Valley will innovate and become the AI winners; but it would be foolish to count out the China who have a huge structural advantage over the US. At 730 million, China's online population alone is almost twice the size of America's and more tech-savvy. Not only that, China still has room to grow as its internet penetration is still below 55%. “Mobile use in China is light years ahead of anywhere else,” says one tech player. “So you have a huge experimental lab for exciting AI applications. In China we see different consumer behaviours every day, in the US it's a lot slower.”
Furthermore, there is a huge supply of data which is the lifeblood of AI and big data. Because privacy laws are more lax, China begins collecting information from the moment they are born while tech giants Baidu, Alibaba and Tencent are watching what they buy, where they travel and who they chat to.
China building $2.1 billion AI research park
Finally, it is important to remember that China is a communist capitalist society. The government is firmly behind its tech sector and can invest billions of dollars to push innovation even faster. Last year, China laid out plans to become a world leader in AI by 2030. Yesterday, China announced plans to build a $2.1 billion technology park dedicated to developing AI which will be constructed within five years. It will cover over 135 acres of land. The park will be home to around 400 businesses and is expected to create an annual output value of about 50 billion yuan ($7.7 billion). High-speed big data, cloud computing, biometrics and deep learning will be the focus of the new park.
For those investors looking for exposure to China's AI development, we recommend first looking at the BAT (Baidu, Alibaba, Tencent) stocks which are China's version of the FANG stocks (Facebook, Amazon, Netflix, Google). The BAT stocks are the Chinese technology giants that are investing billions into AI. If you want broader exposure, then you can consider Kraneshares China Internet ETF (ticker KWEB) which is up over 60% over the last year. Roughly 25% of the ETF is invested in the BAT stocks. For those that want even broader China exposure, there is the iShares MSCI China ETF (ticker MCHI) which is up over 30% in the last year. Over 35% of the MCHI is invested in BAT stocks.