The media is fascinated by the newly released US-created chatbots. Part of this fascination comes from the apparent confirmation that the US is a world leader in these areas. It is a narrow view of the world that ignores the developments already in place in China. It is useful to explore this a little further because if those entering the China market subscribe to this view that China is digitally behind the times, then they would be putting themselves at a disadvantage.

We need to be wary of using these tools as a window into non-US cultures because of the inherent bias built into the AI. The same is true of Chinese versions, although to a lesser extent.

Here are two examples. First, when prompted to replicate the image of a Chinese takeaway meal, Western-developed AI usually provides an image based on a US version of Chinese takeaway like sweet and sour chicken, whereas a Chinese-developed AI shows a local dish of noodles or dumplings.

Second, Chinese facial recognition software has a high accuracy rate across many races, as I discovered in a company demonstration in Shenzhen which included delegates from Europe, India, Asia, Africa and Brazil. The accuracy of US facial recognition software declines substantially when it moves away from Caucasian populations. That is programming bias.

Arnold Ma, CEO of Qumin, provides a few examples of Chinese smart AI-driven applications that are in widespread use. Fadada is an AItrained service that is able to review any contract within minutes and provide complete risk evaluations. The potential for this is only under discussion in Western economies but is already in use in China.

The chatbot Plato has been trained with a billion-plus samples of both Chinese and English. It is an efficient dialogue-generator.

See also: <a class='gtm_see_also_1_inread' style='text-decoration: underline;' href='/views/china-focus/china-must-avoid-debt-deflation-spiral?utm_source=website&utm_medium=article&utm_campaign=ONPAGESEO'>China must avoid a debt-deflation spiral</a>

Meta Sota creates high-quality text and is able to rewrite entire articles. Caiyun Xiao Meng claims to be able to generate a work of fiction once given a title or an opening paragraph. (Personally, having just completed a 90,000-word work of fiction, I have extreme doubts about the ability of any AI to produce original works of fiction.)

The written word is an obvious target for AI, and Mujicv speeds up the process of formatting and designing CVs. Huawei takes on the repetitive task of coding with the Pan-Gu Coder. This delivers text-to-code generation and is able to efficiently solve coding problems.

The Yzen application allows the user to take a still image and turn it into a video in a few seconds, as well as automatically dub the audio. AiZH takes the concept further. This art and image generator produces a picture based on the user typing in a short description. It may be a revolutionary GPT (generative pretrained transformer) concept in the West, but much of it is “old hat” in the China digital landscape.

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Those re-engaging with China, or those starting their first engagement, need to discard the myths peddled by Western media that suggest that the most advanced AI applications are to be found in the US and that China is a mere follower. US President Joe Biden’s Chips Act tacitly recognises China’s lead in these areas, and the Act is an attempt to sabotage the lead. Businesses cannot afford to follow either the media-generated triumphalism or duplicate the tactics of sabotage.

Technical outlook for the Shanghai Composite Index

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The Shanghai index has consolidated inside the long-term historical trading band. The index has staged rallies and retreats between support near 3,220 and resistance near 3,280.

On balance, the index has developed bullish pressure which has seen the index move above 3,280. These bullish breakouts are precursors to a continuation of the long-term uptrend.

Analysis using the Guppy Multiple Moving Average (GMMA) indicator supports this conclusion. The most important feature is the behaviour of the long-term group of averages. These averages are a proxy for the way that investors are thinking. The wide separation shows strong support for the current uptrend.

Wide separation shows that investors are buyers whenever there is a price pullback. The most recent pullback did not cause compression in the long-term GMMA. This is a bullish response. It shows that investors came into the market aggressively and bought the index as weakness developed. If the long-term GMMA had started to compress, then it would be an indication that investors were selling as the market dropped.

For more stories about where money flows, <a class='gtm_see_also_3_inread' style='text-decoration: underline;' href='/section/capital?utm_source=website&utm_medium=article&utm_campaign=ONPAGESEO'>click here for Capital Section</a>

The upper edge of the long-term GMMA is above the lower edge of the trading band. Full trend confirmation comes when the lower edge of the long-term GMMA moves above 3,220.

The short-term GMMA shows the implied thinking of traders. The more rapid expansion and compression are typical of short-term traders taking profits and re-joining the trend at points of weakness. This recent behaviour is a consolidation and develops a sound base for a breakout and continuation of the uptrend.

The breakout above the 3,280 resistance confirms there is underlying momentum that can support the resumption of the uptrend.

The short-term target is 3,415, which is the peak of the breakout in July 2022. The current uptrend and breakout test are part of the development of the long-term fan pattern and a doublebottom rebound. The 3,425 level is a resistance feature, and it is reasonable to anticipate the market will again consolidate and move sideways around this level.

The depth of the double-bottom pattern is measured, and then this value is projected upwards. The very longterm target for the pattern is around 3,860. To reach this target, the index must now move above strong historical resistance near 3,700.

The fan pattern signals a long-term trend change. The fan starts from a single point and consists of multiple trendlines that fan out. The fan pattern is often associated with very long-term breakout patterns that develop over many months.

The most important indication of a trend continuation towards the 3,415 target is a sustained move above resistance near 3,280. Once this breakout develops, the market will see a surge in investor buying that will sustain the uptrend.

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