In the coming decade, China aims to take the lead in artificial intelligence (AI) technology, displacing the current global leader—the United States. While American companies such as OpenAI, Google, and Meta currently dominate the field, China is rapidly closing the gap by offering efficient and more affordable solutions.
AI development has become a cornerstone of Beijing’s strategy. In 2017, the State Council of China approved an ambitious plan called the “New Generation Artificial Intelligence Development Plan.” According to this document, China aimed to catch up with leading AI nations by 2020, become a global leader in certain areas by 2025, and fully establish itself as a global innovation hub in AI by 2030.
Photo: Digital Watch Observatory
Today, it is evident that this goal is more than attainable. China is investing massive resources in AI, supporting technological development at both the state and private sector levels. Additionally, Beijing is prioritizing talent development, attracting top specialists from abroad, and fostering its own scientific schools.
However, China’s AI policy is not limited to economic and scientific aspects alone. Beijing not only seeks to develop AI technologies but also to control their application. China’s stance on AI regulation is dual: on one hand, the government strongly opposes the development of autonomous lethal systems, but on the other, it resists international restrictions that could hinder the use of AI in the military sector. Notably, China is actively integrating AI into its defense industry, raising concerns among its geopolitical rivals.
DeepSeek’s breakthrough and its market impact
Photo: Reuters
Given the rapid advancement of AI, it is no surprise that the Chinese company DeepSeek has caused a major industry shake-up. In January 2024, this startup created a global stir by unveiling its new language model, DeepSeek-R1, which can compete with ChatGPT.
DeepSeek’s success is attributed to several key factors:
- Cost efficiency. Unlike its American counterparts, DeepSeek-R1 was developed at a fraction of the cost. The model was built in just two months, using 2,000 Nvidia chips and approximately $5.6 million. By comparison, OpenAI, Google, and Meta spend ten times more on their models.
- Open-source approach. Unlike ChatGPT, the Chinese model was released as open-source, allowing researchers worldwide to study its architecture and integrate it into their own developments.
- Minimal dependence on American technology. Amid the ongoing U.S.-China trade wars, this factor is critically important. China has demonstrated its ability to develop powerful AI models with reduced reliance on American hardware, potentially weakening Nvidia and other Western manufacturers in the long run.
These attributes have made DeepSeek-R1 one of the most powerful open-source AI models to date.
Consequences of DeepSeek’s success
Photo: Investopedia
The market reaction was swift. Shortly after DeepSeek-R1’s release, Nvidia’s stock plummeted by 17%, wiping out $600 billion in market capitalization. This sent shockwaves through the American tech giants, who suddenly realized that China was emerging as a formidable and highly competitive player in AI.
In China, the launch of DeepSeek also led to significant changes. Companies like Alibaba, Bytedance, and Baidu found themselves under pressure, forced to respond to this new challenge. A fierce price war erupted in the AI market, which, according to analysts, could mark the beginning of an era of mass AI model production and further cost reductions for such technologies.
However, DeepSeek’s impact extends beyond a technological breakthrough. Many experts have interpreted it as having political significance. The release date of the technical details for the new model coincided with Donald Trump’s inauguration day, which American analysts suggest was not a coincidence but rather a symbolic message from China.
China’s AI policy: Key directions and challenges
Photo: Asia Times
The Chinese government continues to aggressively develop the AI sector, setting key objectives in its government work report published during the third session of the 14th National People’s Congress. Among the top priorities are mechanisms to boost investment in advanced fields such as biofabrication, quantum technologies, existential intelligence, and the development of sixth-generation (6G) networks. These initiatives are designed to establish technological supremacy and accelerate the digital transformation of China’s economy.
A crucial part of this strategy is the “Artificial Intelligence +” initiative, which promotes the deep integration of digital technologies into manufacturing and market processes. This initiative supports the large-scale deployment of foundational language models, the development of intelligent networked vehicles, smartphones, computers, and modern industrial systems. Furthermore, the expansion of 5G applications is accelerating industrial internet innovations and optimizing the distribution of computing power nationwide.
The digital economy demands new approaches to data regulation, and China is actively working in this direction. Efforts are underway to enhance data governance institutions, simplify cross-border information exchange while ensuring security, and regulate platform economies to improve their role in driving innovation, stimulating consumer demand, and creating new jobs.
DeepSeek’s recent breakthrough in AI has showcased China’s immense innovative potential. However, this success has also intensified technological competition with the United States. Speaking at a press conference during the third session of the 14th National People’s Congress, Politburo member and Foreign Minister Wang Yi remarked that China has repeatedly faced external pressure and blockades from foreign players. Despite this, China has made significant advancements in space technology, 5G, quantum computing, and artificial intelligence.
According to Wang Yi, artificial barriers and restrictions imposed against China ultimately serve to stimulate the country’s domestic innovation. In this high-stakes technological race, China remains committed to open cooperation and strengthening the scientific and technological capabilities of the Global South. Under President Xi Jinping’s “Global AI Governance Initiative,” China is actively promoting inclusive programs and international collaboration. The country has published an “Inclusive AI Capacity-Building Program,” co-initiated an “Open Science International Cooperation Initiative” with Brazil, South Africa, and the African Union, and consistently advocates for greater technological empowerment of the Global South. China has expressed its readiness to share its AI innovations with major global players and contribute to humanity’s collective progress.
Wang Yi emphasized that scientific and technological progress should benefit all of humanity, rather than serve as a tool for isolation and confrontation. He reiterated China’s willingness to share its innovations with the global community and develop international cooperation in AI to ensure technological advancements on a global scale.
What’s next?
China has already transformed the AI market, but its ambitions are only growing. It is no longer just catching up with the U.S.—it is offering an alternative model of technological development, where innovation is closely tied to state control and strategic planning.
If this trend continues, we may witness a dramatic shift in the balance of power in AI in the coming years. DeepSeek has served as a wake-up call for the West, forcing American tech giants to rethink their strategies.
The key question now is how the U.S. will respond to this challenge. Will it ramp up restrictions on Chinese technologies, attempt to monopolize the market for high-performance chips, or seek new avenues for competition? One thing is certain: the battle for AI supremacy is just beginning, and its outcome will determine who dominates the global economy of the future.
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