Is China building the metaverse?

There is a heated debate on the state of the race between the United States and China to dominate in AI. But perhaps the more strategic question is whether China is building the metaverse.

Built upon infrastructural technologies like AI, the metaverse refers to the vast array of digital experiences and ecosystems, from e-commerce and entertainment to social media and work, where we spend more and more of our lives. It’s soon going to be hard to conceive of a world in which much of our social and economic lives are not defined by the rules of the metaverse. To the builder goes the opportunity to establish rules to their own benefit.

In truth, both the U.S. and China are trying to build and lay claim to the metaverse, with other actors such as Europe trying to do so as well, but they simply don’t control enough of the core technologies that make the metaverse possible.

These core technologies include AI, 5G, end-user devices and the sector-straddling super apps that bring everything together — and related technologies such as smartwatches and eyewear. Competence and dominance across these four criteria is what may give China an insurmountable head start over the U.S. in the race to build the future of the virtualized human experience.

China’s AI advantage

The Chinese leadership understands that AI is revolutionizing virtually all aspects of social life, including consumption. AI is a top priority for government and business, and the Chinese government has called for China to achieve major new breakthroughs by 2025 and become the global leader in AI by 2030.

If the metaverse does become the successor to the internet, who builds it, and how, will be extremely important to the future of the economy and society as a whole.

The strategy was initially outlined in the Chinese government’s New Generation Artificial Intelligence Development Plan in 2017. It has since spurred both new policies and billions of dollars of R&D investments from ministries, provincial governments and private companies.

As a result of China’s AI initiatives, the American advantage in the sector has been steadily eroding: In 2017 the U.S. had an 11x lead over China, but by 2019, that lead had come down to 7x. By 2020, the U.S. was left with a narrow lead of 6x. Even this lead has been uncertain, and the ex-chief software officer of the Pentagon went so far as to say that China already had an insurmountable lead in AI and machine learning.

Moreover, some question the American lead when it comes to the availability of training data. In the privacy versus public good debate, the U.S. tends to lean toward privacy, whereas China has long exercised government intervention in maintaining a civil society as a public good.

Finally, China has access to vast data sets to train AI, which presents a significant strategic advantage, especially considering the country’s population of 1.4 billion.

China builds the devices

The capacity to build and ultimately become the preeminent force in the metaverse starts with China’s long-standing and unrivaled dominance of consumer device manufacturing. From smartphones and notebooks to AR and VR headsets, Chinese manufacturers are building the largest portion and widest varieties of the devices that consumers need to access digital platforms and social experiences. The most advanced design and production competencies are likely to already reside in cities like Shenzhen.