Beijing embraces DeepSeek to lead AI adoption as it looks for new growth drivers

China’s AI Surge: DeepSeek’s Rise and its Economic Impact

The recent surge in popularity of DeepSeek, a Chinese-developed chatbot, has sent ripples through the global tech industry, wiping billions off the market capitalization of US-based AI companies like OpenAI’s ChatGPT. DeepSeek’s remarkable success, with downloads exceeding those of its American counterpart on the Apple App Store, underscores China’s rapid advancement in artificial intelligence (AI) and its potential to reshape the global economic landscape.

DeepSeek: A Catalyst for Economic Growth

Goldman Sachs predicts that AI adoption, spearheaded by DeepSeek, could boost China’s GDP by 20 to 30 basis points by 2030. The investment bank anticipates that the benefits will start becoming evident as early as next year, as AI-driven automation enhances productivity across various sectors. This optimism is reflected in the sharp rise of China stocks,with the MSCI China index soaring over 21% from its january low,according to LSEG data. The appearance of DeepSeek has sparked a renewed interest in China’s investment potential, prompting Morgan Stanley to revise its stance on the country’s “investability.”

“DeepSeek demonstrates that China is at or near the cutting edge of AI progress,which boosts the prestige of china’s economy and tech ecosystem,making them more attractive for global investors,” explained Gabriel Wildau,managing director at Teneo.

A Timely Boost for China’s Economy

DeepSeek’s emergence coincides with a period of economic uncertainty for China. The country faces challenges such as a slumping property market and the specter of a trade war with the US.The AI chatbot’s arrival offers a much-needed dose of confidence, demonstrating China’s technological prowess and potential for growth.

DeepSeek’s R-1 reasoning model has garnered notable attention for its ability to rival, and potentially surpass, leading global AI offerings. The model’s purported efficiency, running on less elegant and cheaper hardware, adds to its appeal. Moreover, its open-source nature allows developers to adapt and utilize it for various applications, potentially leading to significant cost savings and efficiency gains.

DeepSeek: Reshaping China’s AI Landscape

DeepSeek’s impact extends beyond its technological achievements. The startup has become a symbol of China’s ambition in AI, garnering attention and support from both the government and private sector. Chinese President xi Jinping personally met with DeepSeek founder Liang Wenfeng, lauding the company’s contributions and signaling the government’s commitment to fostering innovation in the AI sector.

State-owned enterprises and major tech players, including rivals, are actively embracing DeepSeek’s open-source architecture. Local governments are even incorporating DeepSeek-powered “public servants” to automate administrative tasks and public services, further solidifying the technology’s presence in Chinese society. Chinese businesses, from automakers and financial institutions to smartphone manufacturers and cloud computing providers, are rapidly adopting DeepSeek to explore its potential for boosting productivity.

Navigating the Potential Challenges of AI Adoption

Despite the excitement surrounding DeepSeek, economists caution against rapid AI adoption, citing the potential impact on China’s already strained labor market.Goldman Sachs warns that AI-driven job losses could exacerbate deflation and weaken the economy.

China’s youth unemployment rate remains above 15%, adding urgency to managing the transition to an AI-powered workforce. While sectors like agriculture, manufacturing, and construction, which account for a significant portion of Chinese jobs, are less prone to AI automation compared to their US counterparts, sectors more susceptible to AI adoption, such as finance, insurance, and services, may experience job losses.

Despite these concerns, Goldman Sachs believes that the long-term impact of AI on employment will be positive. While some jobs will be displaced in the short term, the overall creation of new jobs in AI-related fields and industries where human skills remain crucial will ultimately lead to employment growth.

The Path Forward

DeepSeek’s explosive rise signifies a pivotal moment for China, positioning itself as a major player in the global AI race. the country’s proactive approach,combining government support,private sector innovation,and open-source collaboration,offers a compelling model for AI development and deployment. As China continues to champion AI integration,the world will be watching closely,anticipating its impact on the global economy,workforce,and technological landscape.

Does DeepSeek’s open-source nature possibly create challenges related to intellectual property and responsible use?

China’s AI Surge: A Conversation with Dr. Liang Wenfeng, Founder of DeepSeek

DeepSeek’s Phenomenal Rise

Archyde: Dr. liang,DeepSeek has taken the AI world by storm,surpassing ChatGPT in downloads on the Apple App Store. What do you attribute this success to?

Dr. Liang Wenfeng: I believe our success can be attributed to a few key factors.First, our R-1 reasoning model is designed to be efficient and cost-effective, running on less powerful hardware. Second, DeepSeek’s open-source nature has allowed developers worldwide to adapt and build upon our technology. Lastly, I think there’s a growing interest in alternatives to Western AI models, and DeepSeek has filled that void.

DeepSeek’s Economic Impact

Archyde: Goldman Sachs predicts that AI adoption, led by DeepSeek, could boost China’s GDP by 20 to 30 basis points by 2030. How do you see DeepSeek contributing to this growth?

Dr. Liang: DeepSeek’s open-source model allows for widespread adoption and adaptation across various industries. From automakers to cloud computing providers, businesses are exploring how DeepSeek can boost productivity. As AI-driven automation enhances efficiency, we expect to see a meaningful impact on China’s GDP.

China’s AI Ambition

Archyde: DeepSeek has become a symbol of China’s AI ambition. How has the government’s support influenced your work, and what does it mean for China’s tech ecosystem?

dr. Liang: The government’s support has been instrumental in DeepSeek’s success. President Xi’s endorsement has opened doors for us and signaled to the market that AI is a priority. This support, combined with private sector innovation and open-source collaboration, creates a compelling model for AI development and deployment. It’s a testament to China’s commitment to becoming a global AI leader.

navigating AI’s Impact on Employment

Archyde: while AI promises significant economic growth, there are concerns about job displacement. How do you think china should manage this transition?

Dr.Liang: It’s a valid concern,especially given China’s high youth unemployment rate. I believe a balanced approach is necessary. We should invest in reskilling and upskilling programs to prepare workers for AI-related jobs. Simultaneously, we should encourage AI adoption in sectors less prone to automation, like manufacturing and construction, to create new opportunities.

Thoughts on the Global AI Landscape

Archyde: DeepSeek’s success has shifted the global AI landscape. What do you think the future holds for AI, and how will China play a role in shaping it?

Dr. Liang: I believe AI will continue to transform industries and societies. China, with its proactive approach and vast market, is well-positioned to lead this transformation. We’re likely to see more collaboration and competition in the global AI race, driving innovation and benefiting users worldwide.