DeepSeek AI: A Wake-Up Call for Western Tech Giants
Donald Trump, for once, did not use exaggeration. The introduction of DeepSeek AI, a low-cost Chinese chatbot, to compete with ChatGPT is very alarming. It serves as a warning to the US tech behemoths. It serves as a warning to Wall Street. It serves as a warning to any developed country eager to join the AI race.
China’s AI Breakthrough: A Modern-Day Sputnik Moment?
Even if DeepSeek AI turns out to be less than what it seems, all of the above is still true. If it is authentic, the Chinese have produced a high-end AI product that is readily accessible and reasonably priced. That’s a lot. The Soviet Union launched its first artificial satellite in 1957, shocking the United States. The introduction of DeepSeek AI has also surprised it. This would be a Sputnik moment.
AI and the Global Power Shift: A New Technology Race
The ability of a Chinese startup to accomplish on a shoestring what US tech corporations have been compelled to spend billions of dollars on is certainly questioned by some. Even if their suspicions turn out to be valid, the larger picture remains unaffected: China poses a genuine challenge to Western technical supremacy. The competition to win the AI race will be as fierce as the space race of the 1950s and 1960s, if not more so. The economic might of China is greater than that of the Soviet Union.
When China’s economy first started to grow quickly, it was thought that US and European businesses could outsource their production there. Labor was inexpensive, and shifting production elsewhere promised greater financial gain. All of the most cutting-edge work, including product design and research and development, was supposed to be done in the West. All that would be sent to Guangdong would be the assembly work. The Marxist-Leninist regime in China would restrict the creativity required to develop new concepts and new goods.
That viewpoint has turned out to be unduly complacent. China submitted more patents in 2023 than the entire globe combined. On average, Chinese institutions produce over 6,000 PhDs in STEM fields (science, technology, engineering, and mathematics) per month, which is more than twice as many as the US. As demonstrated by DeepSeek AI, China is home to an increasing number of highly intelligent individuals who, given the opportunity, are capable of thinking creatively. This is seen in the development of artificial intelligence (AI), lithium-ion batteries, and electric vehicles.
US Protectionism vs. China’s Strategic Growth in AI
The United States is cognizant of the danger to its hegemony, and both parties in Washington are committed to limiting China’s economic might. When Joe Biden was elected president, he maintained and increased the tariffs on Chinese imports into the US that Trump had put in place during his first term. To keep nations like China from obtaining cutting-edge technology, Biden placed new limitations on the export of computer chips made in the US one week before his departure. To promote the production of climate-friendly goods in the United States, Biden’s Inflation Reduction Act provided incentives.
It might be too late in some industries. Since China is currently the largest supplier of EVs, the US and EU have imposed protective tariffs. The cost of lithium-ion batteries made in Chinese manufacturing now is a sixth of what it was a decade ago per kWh. The US and other Western countries should not have been surprised that the Chinese would only find a global division of labor, where they performed all the low-cost grunt work, to be somewhat appealing. Rather, China has made a determined effort to continue manufacturing toys, TV sets, and shoes while simultaneously branching out into higher-tech industries.
Economic and Political Challenges for China’s AI Leadership
The tactic can have drawbacks. Some say that the demands for democracy will eventually render China’s political and economic models irreconcilable and that the Communist Party will be compelled to lessen its repressive practices. China’s economic issues are also not completely resolved. A large number of state-owned businesses are losing money. The real estate bubble has well and fully burst.
What DeepSeek Means for the Future of AI Competition
Nevertheless, the competition for supremacy in AI is intensifying. Trump is correct when he says that the US tech industry will benefit from some competition from China.
Although the availability of less expensive models may accelerate the application of AI, the DeepSeek revelation caused a sharp decline in the value of IT stocks on Wall Street by raising doubts about the value of the large investment in US companies. Although there are undoubtedly hazards involved, including those to jobs, privacy, and security, there may also be advantages.
Can the West Keep Up with China’s AI Momentum?
According to Keir Starmer, he wants Britain to become a “superpower” in artificial intelligence, and as development costs decrease, this objective should be simpler to achieve. Talk, however, is cheap. China’s high-tech industries did not merely appear overnight, and its dominance in the low-cost EV market is no coincidence. China, like other East Asian nations before it, adopted a strategic approach to the industries in which it wished to compete, made significant investments to build them, safeguarded them during their early stages, and patiently awaited the outcomes. Neither a steadfast faith in market dynamics nor a dislike of selecting winners have been present. There is no more glaring contrast to the UK.