At the World AI Conference in Shanghai last week, one of China’s leading AI companies, SenseTime, unveiled its latest model, SenseNova 5.5.
The model demonstrated its ability to identify and describe a stuffed puppy (wearing a SenseTime cap), offered feedback on a drawing of a rabbit, and instantly read and summarized a page of text. According to SenseTime, SenseNova 5.5 is comparable to GPT-4o, the flagship AI model from Microsoft-backed U.S. company OpenAI.
If that wasn’t enough to attract users, SenseTime is also giving away 50 million free tokens (digital credits for using AI) and says it will deploy staff to help new customers migrate from OpenAI services to SenseTime products for free.
Chinese attempts to lure local developers away from OpenAI — widely considered the market leader in generative AI — will now be much easier, after OpenAI notified its users in China that they would be blocked from using its tools and services starting July 9.
“We are taking additional steps to block API traffic from regions where we do not support access to OpenAI services,” an OpenAI spokesperson told Bloomberg last month.
OpenAI has not provided further details on the reason for its sudden decision. ChatGPT is already blocked in China by the government firewall, but until this week developers could use virtual private networks to access OpenAI tools to fine-tune their own generative AI applications and evaluate their own research. Now the block is coming from the US side.
Rising tensions between Washington and Beijing have led the US to restrict the export to China of certain advanced semiconductors that are vital for training the latest AI technology, putting pressure on other parts of the AI industry.
OpenAI’s decision “has sparked significant concern within China’s AI community,” said Xiaohu Zhu, founder of the Shanghai-based Center for Safe AGI, which promotes AI safety, especially because “the decision raises questions about equitable access to AI technologies globally.”
But it has also created an opportunity for domestic AI companies like SenseTime, which are scrambling to absorb rejected OpenAI users. After warnings about OpenAI’s decision circulated last month, Baidu offered 50 million free tokens for its Ernie 3.5 AI model, as well as free migration services, while Zhipu AI, another local company, offered 150 million free tokens for its model. Tencent Cloud is giving away 100 million free tokens for its AI model to new users until the end of July. “Competitors are offering migration paths for former OpenAI users, seeing this as an opportunity to expand their user base,” Zhu said.
One consequence of OpenAI’s decision may be that it accelerates the development of Chinese AI companies, which compete closely with their American rivals and with each other. China is estimated to have at least 130 large language models, accounting for 40% of the global total and second only to the United States. But while American companies like OpenAI have been at the forefront of generative AI, Chinese companies have been embroiled in a price war that some analysts have speculated may hurt their profit margins and ability to innovate. Still, Winston Ma, a professor at New York University who writes about Chinese technology, said OpenAI’s exit from China comes “at a time when the big Chinese tech players are closing the performance gap with OpenAI and are offering these Chinese LLM models essentially for free.”
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“OpenAI’s exit is a short-term shock to the Chinese market, but it may provide a long-term opportunity for domestic Chinese LLM models to be tested,” Ma said. So far, Chinese companies have focused on commercializing large language models rather than advancing the models themselves, he added.
Chinese analysts have been keen to downplay the impact of OpenAI’s decision. State-run media outlet Global Times said it was “a push by the US to hinder China’s technological development.” Pan Helin, a digital economy researcher at Zhejiang University who sits on a government technology committee, described the development as “a good thing for the independence and self-reliance of China’s large-scale model,” according to Chinese media.
But there are signs that US restrictions on China’s AI industry are starting to pay off. Online video giant Kuaishou recently had to limit the number of people who could access its new text-to-video AI model, Kling, due to a Lack of computing power caused by chip shortageAccording to a report by The Information, there is now a booming hidden market for American semiconductors as companies find ways to circumvent sanctions. Being denied access to American software may inspire similar creativity.
