DeepSeek AI is a 'gift to the world': The biggest story out of China right now, here's why

The global AI community never saw it coming.

Just as the world thought it had grasped the pace of innovation, a Chinese startup shattered expectations with the unveiling of a groundbreaking large-language model (LLM) that sent shockwaves through the entire tech industry, potentially rewriting the rules of the game.

What’s more fascinating about this development: the timing of its release. And what it means for the future of big power, i.e. US-China, relations.

Even US president Donald Trump lauded the new tech marvel unleashed by DeepSeek.

Deep-data analysis

On January 20, the very same day that Donald Trump was sworn in as the 47th president of the United States, China released DeepSeek R1, an advanced AI tool designed for deep-data analysis.

It is an immediate rival to America’s OpenAI.

DeepSeek, which traces its roots back to California’s Stanford University, is backed by High-Flyer, one of China's top hedge funds, valued at $8 billion. Its founder and CEO, Liang Wenfeng, is known for his boldness. He now seems unstoppable.

He once declared: “Chinese firms often settle for copying and commercialisation. We want to change that. DeepSeek is here to ignite ‘hardcore innovation’ across the economy.”

So while it took Google and OpenAI years — and billions of dollars — to build the latest LLMs, now a Chinese research lab has built a competitive model in just two months with limited GPUs for less than $6 million — not billion — $6 million.

Biggest story out of China

This is the biggest story coming out of China right now because it will change the future of tech around the world.

But once again, focus on the timing of this event.

Make no mistake: China waited to release this impressive development on the morning of Donald Trump’s inauguration to send a strong signal.

Sanctions

Under the Biden administration, the US government passed unprecedented tech sanctions against China, hoping to contain the country’s rise.

Survive and thrive

But the moment Trump ascended into power, China launched this new AI platform to send a clear and stern message: not only have we survived the previous administration's sanctions, but we’ve also managed to thrive.

China’s new AI software performs just as well as its American counterpart, but it was developed with half the technology and at a fraction of the cost.

Open-source

Even more incredible, China is making this new AI tool open source, allowing anyone to view, modify, distribute, and use it.

If a model like DeepSeek can emerge with competitive performance at minimal cost, it signals a rapidly shrinking barrier to entry in AI development, challenging the current dominance of industry leaders like OpenAI, Google, Anthropic, and Meta.

Many Silicon Valley CEOs are genuinely concerned about the future. The AI industry, dominated by US tech giants like Nvidia, Google, and Meta, is now seeing China able to overcome obstacles and accomplish the unimaginable.

Former Google CEO Eric Schmidt once claimed that the US was years ahead of China in AI development.

But by November, he admitted that Chinese companies, such as Alibaba and Tencent, were quickly closing the gap.

Schmidt stated, “I thought the restrictions we placed on chips would keep them back. This is shocking to me.”

From challenge to opportunity

These revelations highlight how dynamic and fast-moving the AI race has become.

DeepSeek's breakthrough is a case study in turning challenges into opportunities. When the US cut off microchip exports, China redirected resources back into domestic tech companies, accelerating advancements in AI and semiconductors.

$6 million to develop DeepSeek R1

The development of DeepSeek R1 is a prime example of this progress. With a budget of only $6 million, China achieved results comparable to America’s billion-dollar AI models.

DeepSeek R1’s performance and affordability have sent shockwaves through Silicon Valley.

Meta engineers are reportedly scrambling to dissect and learn from DeepSeek. With the US export curbs on top-tier chips, Nvidia has released new export-compliant semiconductors for the Chinese market — including those DeepSeek reportedly used to build R1.

Breakthrough challenge

Meanwhile, AI insiders are questioning how their massive budgets can be justified when China’s AI model was developed at such a low cost.

This breakthrough challenges the entire financial foundation of America’s AI industry.

The rise of China in technology is part of a larger trend. America’s trade war with China, initiated in 2018, aimed to reduce the US trade deficit and limit China’s manufacturing dominance.

Yet seven years later, both objectives have failed.

China’s trade surplus has reached a record $1 trillion, and its share of global industrial production has grown to 27%, with the UN projecting it will rise to 45% by 2030.

'Decoupling' from China

US efforts to decouple from China have ironically spurred China’s globalisation efforts.

As foreign brands leave China, Chinese companies are expanding aggressively abroad.

This shift highlights how China is leveraging its domestic and international markets to maintain a competitive edge in technology.

'Gift to the world'

DeepSeek R1’s open-source nature has been praised as a gift to the world. Prominent tech investors, like Mark Andreessen, have recognised the model as a groundbreaking achievement.

With the AI race intensifying, it’s clear that collaboration, not competition, may be the key to sustainable innovation.

An MIT Technology Review article underscores this, arguing that there can be no winners in a US-China AI arms race.

MIT STUDY

Researchers at the MIT Center for Collective Intelligence (CCI) has explored human-AI partnerships via a "meta-analysis" of 370 outcomes from 106 experiments (2020–2023).

The study, published in Nature Human Behaviour, was led by Michelle Vaccaro, Abdullah Almaatouq, and Thomas Malone (“When Combinations of Humans and AI Are Useful”) was the first large-scale meta-analysis conducted to better understand when human-AI combinations are useful in task completion, and when they are not.

Key Findings:

• Human-AI collaboration doesn’t always enhance outcomes universally.

• Partnerships thrive in creative tasks, showcasing potential for combining human ingenuity with AI precision.

• However, these collaborations often underperform in decision-making tasks compared to AI working independently.

• Results revealed that human-AI synergy (outperforming both working alone) was "rarer" than anticipated.

• Human-AI teams frequently exceed human performance alone but often trail behind AI acting independently.

• Surprisingly, the research has found that combining humans and AI to complete decision-making tasks often fell short; but human-AI teams showed much potential working in combination to perform creative tasks.

Why China leads in AI research & developments

It's based on a bold vision and razor-focus on what matters in today's digital-driven world: The Chinese government has prioritised AI (like it did with electric vehicles) as a national strategy.

This was outlined in the 2017 "Next Generation Artificial Intelligence Development Plan", aiming to make China a global AI leader by 2030.

China, with a large population, produces vast amounts of data daily. With fewer restrictions on data collection and usage compared to other countries, this wealth of data supports machine learning and AI training, enhancing algorithm precision and performance.

Moreover, nearly half of the world’s top AI researchers were born or educated in China, indicating that global progress in AI will require cooperation between the two countries.

Most important, substantial funding, incentives for AI startups, and investments in AI-focused infrastructure (e.g., AI innovation zones) have accelerated growth and innovation.

China also hosts tech giants like Baidu, Alibaba, Tencent, and Huawei, which invest heavily in AI research and applications.

It large talent pool, including engineers and researchers specialising in AI, ensures rapid advances. The government also collaborates with universities to bolster AI education and skill development.