In the News: Alibaba Unveils AI Chip; FTSE Russell Omits Chinese Bonds; and Shanghai to Trial Public Data System
September 29, 2019 | BY
Vincent ChowAlibaba unveils first in-house chip for AI applications following Huawei's lead; FTSE Russell leaves out Chinese government bonds from major index; and Shanghai releases interim measures to trial public data system
Alibaba unveils in-house chip designed for AI applications
Alibaba has unveiled its first chip developed for artificial intelligence (AI) applications. Alibaba is the latest technology company to develop its own chip as the Chinese government pushes for companies to be less reliant on traditional semiconductor suppliers, many of which are based in the United States. The Chinese e-commerce giant's new Hanguang 800 is much faster than conventional chips and can cut hour-long computing tasks down to five minutes, its designers say.
Jeff Zhang, Alibaba's chief technology officer, said the chip will help clients access advanced computing via its cloud computing platform and will also support the search algorithms on its e-commerce platforms. Other Chinese tech titans including Baidu and Tencent are also designing AI chips in-house. The Chinese telecom giant Huawei unveiled its own AI semiconductor, the Ascend 910, in August. Developing the next generation of chips is crucial for these tech giants to gain an advantage over their competitors as AI technologies demand faster computing power. Alibaba will not sell the chip as a standalone product, only using it in its own cloud computing products, CNBC reports.
Chinese companies are heavily reliant on chips from the U.S. which dominates the global semiconductor industry. The Chinese government is trying to change that by pushing for more domestic semiconductor research and development, a task made more urgent after U.S. sanctions against ZTE and Huawei barred major American chip companies including Qualcomm and Intel from dealing with them – although Qualcomm has recently begun selling products to Huawei again. China highlighted semiconductors as a key focus of its "Made in China 2025" plan, the government initiative aiming to make the country a global leader in emerging technologies. The latest "encouraged industry catalogue" added high-tech industries including AI, circuits and chips, and cloud computing to the list of industries in which foreign investment is encouraged. In May, the Ministry of Finance and State Administration of Taxation increased tax incentives for the domestic software and integrated circuitry sectors. The government aims to produce domestically 40% of the semiconductors used by 2020 and 70% by 2025.
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FTSE Russell leaves China out of benchmark bond index
FTSE Russell has decided not to include China in its flagship government bond index this year. The index provider announced its decision after an annual review in New York, highlighting market liquidity and foreign exchange concerns as reasons for not including China's $5 trillion government debt market in its World Government Bond Index. Indexes contain a hypothetical portfolio of investments that are used by investors as benchmarks for their investment decisions, for example through index funds. China remains on FTSE Russell's watch list for potential index inclusion.
Index users "have provided feedback that they would like to observe further improvements to secondary market liquidity, and increased flexibility in [foreign exchange] execution and the settlement of transactions", FTSE Russell explained. It also said however that China has made "significant progress" towards achieving inclusion in its government bond index through various measures to open up the government bond market to foreign investment. Earlier in September, JPMorgan outlined plans to include Chinese bonds in its government bond index starting in 2020. In April, Bloomberg began including Chinese government and policy bank bonds in one of its major benchmarks comprised of a variety of different bonds.
At the end of August, foreign ownership of Chinese debt through the Bond Connect program totalled more than $280 billion, up more than a third from the end of 2018. But FTSE Russell's decision means China could miss out on $7.5 billion of monthly investment inflows, according to an estimate by Goldman Sachs. China's onshore bond market suffers from insufficient liquidity as the commercial banks who dominate the market tend to hold bonds to maturity instead of trading them. The government has tried to address this including a recent measure allowing more banks to trade debt in China's exchange market, the secondary bond market supplementing the primary interbank bond market. Earlier in September, the State Administration of Foreign Exchange (SAFE) scrapped foreign investment limits in bonds and stocks under the Qualified Foreign Institutional Investor (QFII) program.
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Shanghai to introduce new regulation on public data
Shanghai has introduced the first local government regulations on public data accessibility in China. The Shanghai Municipal Government released interim measures outlining plans to trial a data system from Oct. 1 which will provide open access to public data relating to four industries: finance, transportation, health and tourism.
The measures state that data classification and anonymity are key requirements when it comes to public data disclosure, and that personal privacy and trade secrets will be protected under the new system. Personal data and trade secrets will be classified as "non-open", with personal information such as addresses and ages "masked". Zhu Zongyao, director of the Shanghai Big Data Center, said the system will help improve the investment environment in Shanghai by improving access to important data.
Last October, several heads of multinational corporations emphasized the importance of open data in supporting industry development in Shanghai during a consultation conference between Shanghai Mayor Ying Yong and international business leaders. After the meeting, the mayor signaled that public data access would be improved in the city. The city has ranked first in data openness among Chinese cities every year since 2017, according to Fudan University. The development of China's social credit system since 2014 has greatly increased the amount of data on Chinese individuals and businesses published and updated regularly on publicly accessible national and local databases. In May, the Cyberspace Administration of China issued draft regulations giving customers more control over the collection and usage of their personal information by internet companies.
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