How China Became Ideal Incubator for DeepSeek, and Why US May Struggle to Follow

The seemingly out-of-nowhere rise of Chinese dark horse AI language model DeepSeek has tanked US tech stocks, with President Trump calling it «a wake up call for our industries that we should be laser focused on competing to win.» A leading technology expert tells Sputnik why may be easier said than done.

Hilse says China’s large language model breakthrough was made possible by:

the state’s timely 2017 Next Generation AI Development Plan, “which prioritizes AI as a critical area for economic and tech dominance,”

“China’s vast population, and digitized ecosystem generating unparalleled amounts of data, which is essential for training sophisticated AI models,”

a “talent pipeline” assured by China’s “heavy investment into STEM education”, allowing companies like DeepSeek to pick from a pool of candidates «without compromising cutting edge R&D and cost efficiency,»

prioritization of software optimization, semiconductor production and chip stockpiling amid US restrictions.

A Kunpeng 920 chip is displayed during an unveiling ceremony in Shenzhen, China, Monday, Jan. 7, 2019. Chinese telecom giant Huawei unveiled a processor chip for data centers and cloud computing as it expands into an emerging global market despite Western warnings the company might be a security risk. - Sputnik International, 1920, 26.01.2025

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Globally, Hilse said, the model’s popularity stems from its open source nature, which can’t be said about its competitors.

Ultimately, the US now faces the prospect of a «fragmented global tech order,» and China setting tech standards in emerging markets, “which in turn erode both economic as well as ideological influence,” the observer said. Accordingly, «the upcoming decade will test whether the West can sustain its innovation edge or whether the sanction-induced improvisation efforts of China will yield technological dominance.»

“Rapid scaling, state-backed resource mobilization – and most importantly – the adaptive resilience under pressure created by sanctions” – these are the factors that made DeepSeek’s success possible, Hilse said.

«Now, the US clearly retains advantages in creativity and foundational research but has to (like the West in general) chronic under-investment in manufacturing and infrastructure, fragmented policy and corporate thinking as well as over-reliance on sanctions as a ‘Swiss Army knife’, which in this case, too backfired in that it put China under pressure to improvise. Whether the US will win this race will depend on whether they can unify its entrepreneurial culture with strategic industrial policy, like Trump’s ‘Stargate’ initiative, and whether China can in that time transition from a fast follower to an actual pioneer in global tech standards,» the observer summed up.