Author: CHARLIE CAMPBELL / BEIJING  January 18, 2018

When Robin Li looks back at the question now, he can laugh. But things were different in 1992, when the Baidu CEO was a tongue-tied Chinese student applying for a computer-graphics graduate program in the U.S. The interviewing professor asked him, “Do you have computers in China?” It left the young man stunned. “I was very embarrassed,” says Li, 49, breaking into a grin from the penthouse office of his Beijing headquarters. “I thought, One day I’ll demonstrate that China has a really powerful computer industry.”

Eight years later, he did. In 2000, Li founded Baidu, a search engine that today is second only to Google in popularity, and whose 80% market share in China makes it the world’s fourth most popular website. The company, whose name derives from a 13th century Chinese poem, has grown into a $60 billion behemoth rivaled in China only by social-media-focused conglomerate Tencent and Jack Ma’s online shopping empire Alibaba. Baidu Maps directs every Chinese motorist, Baidu search results enlighten every student. Nobody is asking Robin Li if computers exist in China anymore.

In fact, what was once a land of cheap knockoffs now has Silicon Valley losing sleep. China has nurtured a third of the world’s 262 tech “unicorns,” or private $1 billion startups, according to a recent report by the global consulting firm McKinsey. Alibaba’s 2014 stock floating remains the biggest IPO in history, valued at $25 billion. China is the world’s largest e-commerce market, accounting for almost half of all global transactions by value, up from less than 1% just over a decade ago. Its big cities are verging on a cashless society, where even steamed buns or rickshaw rides can be purchased with a flash of a smartphone QR code. It’s a far cry from when former U.S. Vice President Joe Biden scoffed that the Middle Kingdom didn’t innovate.

China has now set its sights on the next tech frontier: artificial intelligence. On July 20, China’s State Council issued a Next Generation Artificial Intelligence Development Plan to become the “premier global AI innovation center” by 2030, when it predicts China’s core AI industry will be worth $148 billion, with AI-related fields at $1.48 trillion. China already rivals the world’s leading developed nations by spending 2.1% of its $11.2 trillion GDP on research and development. At November’s Artificial Intelligence and Global Security Summit in Washington, Eric Schmidt, then executive chairman of Google parent Alphabet, predicted China’s AI prowess will overtake the U.S. within a decade. “By 2030, they will dominate the industries of AI,” he said. Russian President Vladimir Putin recently said that whoever masters AI will become “ruler of the world.”

No one in China takes this challenge more seriously than Robin Li. Some $1.2 billion of his firm’s $9 billion revenue over the first three-quarters of 2017 was put back into R&D, according to published accounts–much of it into AI. He believes Baidu can dominate the global market for AI by harnessing China’s greatest advantage: scale. At a basic level, AI systems replicate human learning based on empirical data: whether driving patterns, financial behavior or the true intention behind a slurred voice command. The more data, the better trained the algorithm–giving a company that serves the world’s most populous nation an obvious leg up. “[China is] a very large and uniform market,” Li says. “Everyone speaks the same language; they all obey the same law.”

Baidu began testing its Apollo self-driving cars on public roads late last year

Therein lies the contradiction at the heart of China’s efforts to forge the future: the country has the world’s most severe restrictions on Internet freedom, according to advocacy group Freedom House. China employs a highly sophisticated censorship apparatus, dubbed the Great Firewall, to snuff out any content deemed critical or inappropriate. Google, Facebook and Twitter, as well as news portals like the New York Times, Bloomberg and TIME, are banned. Manned by an army of 2 million online censors, the Great Firewall gives outsiders the impression of deathly silence within.

“Our vision is that humans can interact with all devices using human language,” says Li. “The difference between humans and animals is that humans can use tools. Over the past 100,000 years, whatever tools you invent you have to learn how to use. In the future, you won’t need to do that–tools will learn how to understand human language, human intentions. That’s the future.”

It’s a future that Li could hardly have imagined growing up in Yangquan, a city of about 1 million people in China’s hardscrabble central province of Shanxi, known for farming and mining. Li’s high school had only five Apple II computers for 1,800 pupils, so the teachers prioritized their usage for the dozen kids with the best math scores. Li enjoyed math but “immediately fell in love with computers,” he says. “I thought they were magical.”