Whatever the truth about DeepSeek, China’s tech sector is light years ahead on strategy and investment. For once, Donald Trump was not guilty of hyperbole. The arrival of a budget Chinese chatbot called DeepSeek to rival ChatGPT really is a wake-up call. It is a wake-up call to the US tech giants. It is a wake-up call to Wall Street. It is a wake-up call to any developed nation keen to enter the AI race.
![[Larry Elliott]](https://i.guim.co.uk/img/uploads/2017/10/06/Larry-Elliott,-R.png?width=180&dpr=1&s=none&crop=none)
All of that is true even if it turns out that DeepSeek is not all it is cracked up to be. If it is the real deal then the Chinese have created a premium-quality AI product that is available freely and at a tiny cost. That’s quite something. In 1957, the US was stunned when the Soviet Union became the first country to launch an artificial satellite. It has been equally taken aback by the arrival of DeepSeek. Truly this would be a Sputnik moment.
To be sure, there are those who question whether a Chinese startup can manage to achieve on a shoestring what US tech companies have been forced to spend billions of dollars on. Their doubts may prove to be correct, but that doesn’t affect the bigger picture: China’s threat to western technological dominance is real. The rush to win the AI race will be just as competitive – and perhaps even more so – than the space race of the 1950s and 60s. China carries a bigger economic clout than the Soviet Union ever did.
In the early days of its rapid economic development, China was seen as the place where US and European companies could outsource production. Labour was cheap and moving manufacturing offshore held out the promise of higher profits. The idea was that all the really advanced stuff – the product design, the research and development – would be done in the west. It would only be the assembly work that would end up in Guangdong. The creativity needed to come up with new ideas and new products would be stifled by China’s Marxist-Leninist system.
