For once, Donald Trump wasn’t exaggerating. The launch of DeepSeek, an affordable Chinese chatbot challenging ChatGPT, genuinely serves as a jolt to the US tech behemoths, Wall Street, and any advanced nation eager to dive into the AI arena.
Even if DeepSeek doesn’t quite live up to the hype, its mere introduction is significant. If it’s as impressive as claimed, it means China has rolled out a high-quality AI platform that’s both accessible and affordable. That’s a big deal. It recalls the shock of 1957 when the US was blindsided by the Soviet Union’s launch of the first artificial satellite. DeepSeek’s emergence is shaping up to be a Sputnik-like moment.
Some skeptics argue a Chinese startup couldn’t possibly achieve with limited resources what American tech firms have poured billions into. They might be right, but seeing the bigger picture is essential: China’s challenge to Western tech supremacy is very real. The race to dominate AI could rival the intensity of the space race of the mid-20th century. China’s economic might surpasses what the Soviet Union ever wielded.
In the early stages of its rapid growth, China was largely seen as an outsourcing hub for US and European corporations, thanks to its inexpensive labor. The belief was that the West would handle the advanced processes like design and R&D, leaving just the manufacturing to places like Guangdong. Many underestimated China’s ability to innovate under a Marxist-Leninist regime.
Such assumptions have proven misguided. By 2023, China was submitting more patents than any other nation combined. Chinese universities are producing more than 6,000 STEM PhDs monthly, dwarfing the US output. The creation of DeepSeek highlights the burgeoning pool of brilliant thinkers in China, capable of innovative breakthroughs in areas like AI, lithium-ion batteries, and electric vehicles.
The US is keenly aware of the threat to its dominant position, and curbing China’s rise is a rare point of bipartisan agreement in Washington. Tariffs on Chinese goods initiated by Trump were maintained and expanded by Biden. Toward the end of his presidency, Biden introduced new restrictions to limit China’s access to cutting-edge US-developed chips, while his Inflation Reduction Act provided incentives for domestically-produced, eco-friendly products.
In certain areas, the countermeasures might be too late. China’s now the top exporter of electric vehicles, leading to protective tariffs from both the US and the EU. Chinese factories are churning out lithium-ion batteries at a fraction of the cost they once did. The idea that China would be content with low-cost manufacturing was naive; instead, they’ve strategically pushed into high-tech industries.
There are potential pitfalls to China’s approach. Some argue that its economic structure will eventually clash with its governance model, possibly leading to calls for more political freedoms. Economically, China isn’t without issues; many state-owned enterprises struggle financially, and the real estate market is in turmoil.
Nonetheless, the race to lead in AI is heating up. Trump sees a bit of healthy competition from China as beneficial for US tech, and he’s not wrong. The initial news about DeepSeek shook tech stock values on Wall Street, questioning the worth of hefty US investments, but cheaper models like these could expedite AI adoption, despite accompanying risks to privacy, security, and employment.
Keir Starmer’s ambition for Britain to become an “AI superpower” may seem more attainable with falling development costs, but aspirations need action. China didn’t accidentally become a major player in budget EVs. Like several East Asian nations before it, China identified strategic sectors, invested meticulously, protected fledgling industries, and patiently awaited success. They haven’t dogmatically trusted market forces nor shied away from selecting industry champions—a stark contrast to the UK’s approach.
