China is building its own artificial intelligence industry.

China looks to build a native artificial intelligence industry reaching 100 billion yuan ($14.9 billion) by 2018, with over 100 such firms materializing so far.

Baidu’s virtual assistant Duer stole the show at the company’s technology expo Thursday by giving a play-by-play of a professional basketball game that matched a video. The program automatically pieced together colorful commentary, which described a “sweet” dunk by U.S. superstar Kevin Durant, after learning dialogue from famous sports announcers. That feat was aided further by Baidu’s image recognition technology. CEO Robin Li credits deep learning for fueling the dramatic progress of AI technology over just a few years.

Andrew Ng headed the development of Baidu Brain, the company’s artificial intelligence platform. The world-class authority in deep learning was once involved in research at Google, and Ng has led Baidu’s AI research lab in the U.S. since 2014.

Baidu, once a perpetual straggler behind Google and Apple, is now said to be on par with its biggest rivals in developing AI applications. The Chinese company employs armies of personnel in Silicon Valley and elsewhere. The company is positioning AI as a core business segment, Li said.

Startup binge

AI is taking off in China. Tencent Holdings uses the technology to analyze customer trends through online payments and other data. Those results bolster operating efficiency at affiliated companies.

Chinese tech companies are known to be especially strong in voice recognition. One such company, iFlytek, founded in 1999, has built a reputation for precision — no small feat considering the number of homophones in the Chinese language. China’s AI-based voice processing applications may become commonplace in the Sinosphere in the future.

Roughly 100 AI businesses have sprung up in China, and 65 of them have received 2.9 billion yuan in venture financing, according to local research company iResearch. Fueling that startup binge is Beijing’s three-year program to promote development of that sector.

Both the central and local governments will provide subsidies. Banks, which normally prefer to lend to major enterprises, are being ordered to provide priority financing to companies in the AI field — even startups. The government also apparently is allocating tens of billions of yuan per year in direct spending to the AI sector.

China is pouring so many resources into AI in order to modernize other industries such as electronics and auto manufacturing. The country will leverage its vast internet data, which includes billions of searches and tens of billions of location hits, Baidu’s Li said. The more data to mine, the more efficiently AI programs can engage in deep learning.

However, critics say some of the newcomers may not be worth the funding. Anhui Jiangnan Chemical Industry bought a 50 million yuan stake in July 2015 in a Beijing startup purportedly engaged in deep learning. The chemical maker had hoped the investment would boost productivity, but the tie-up failed to produce results.

“Many of these companies announce AI ventures in order to lift their share prices,” a market insider said.

Still other businesses, seeing an easy profit, jump at these startups. With investment opportunities scarce amid the Chinese economic slowdown, venture capital firms and investment companies are reportedly buying in upon hearing the term “AI.”

Even at Baidu, not all things appear to be going swimmingly.

“A driverless car? Haven’t seen nor heard of one,” said a cabdriver in China’s Anhui Province. Baidu is supposed to be conducting trial runs on nearly 30 self-driving vehicles, yet that developmental leg may not be proceeding as planned. But the global AI race remains in its infancy, and it is too early for international rivals to feel at ease.

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