Global Impact: cut off from high-end chips, how much is the US tech war hurting China’s AI ambitions as Sora highlights worrying gulf?

Global Impact is a weekly curated newsletter featuring a news topic originating in China with a significant macro impact for our newsreaders around the world. Sign up now!

Here we go again. Just as soon as US-based OpenAI’s Sora arrived on the scene, a new crisis of confidence struck China’s artificial intelligence (AI) community, which saw the kind of soul-searching in C-suites and among academics reminiscent of the release of ChatGPT.

But this time, instead of a quirky chatbot, Sora turns text prompts into video. The results, at least at first glance, are impressive. So impressive, in fact, that Zhou Hongyi, the founder of Chinese internet security firm 360 Security Technology, called the product’s release a“barrel of cold water poured down China’s head”.

Sora is not available to the general public yet, but early demo videos appear much more sophisticated than the output of similar products. Just as Chinese firms last year felt pressure to show their progress in large language models, some are now trying to assure investors that they have their own video generators in the works. Zhipu AI, for example, promised that its own Sora-like product would be coming later this year.

Some are optimistic about China’s chances. One AI entrepreneur said China would have Sora-like models coming out in a matter of months.

That is not necessarily blind optimism. Open-source models lag behind the likes of OpenAI’s GPT-4 and Sora, but they are rapidly catching up. Many Chinese products are based on Meta Platforms’ Llama 2 model, which is free to use and maybe a year behind OpenAI’s latest and greatest, by some estimates.