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U.S. vs. China Tech Rivalry: Shaping the Future of the World

Writer's picture: Armin SijamićArmin Sijamić

In just a few days, the Chinese company DeepSeek wiped out billions of dollars in value from its American competitors. The backdrop of this story parallels the space race between Washington and Moscow during the Cold War, and its implications could be felt for decades across the globe.

Close-up of a phone screen with a chat app open. Text reads "Hi, I'm DeepSeek. How can I help you today?" Icon of a whale is visible.
Photo: Illustration

The importance of artificial intelligence (AI) grows every day. Advanced technologies are changing the world, and AI's development is said to render humans almost unnecessary. Therefore, mastering these technologies is the ultimate goal of the world's major powers, as without AI, it will be impossible to envision the future of, for example, the economy or the military.


There is no longer any doubt that China is the United States' greatest rival. American strategists and officials, in both public statements and government documents, assert that China is the only rival capable of defeating the U.S. on ideological, economic, and technological fronts. Such assessments from Washington have not applied to Russia for decades.


The U.S.-China showdown has begun. President Barack Obama advocated it, and Donald Trump, during his first term, initiated sanctions against Chinese tech giants. Joseph Biden continued this with regulations preventing Chinese companies from accessing the best American chips, while Trump, in his second term, launched Stargate—a mega AI project worth at least $500 billion—aimed at ensuring the U.S. remains the leading power in technology.


China's Response


Although the Chinese government encourages its population to contribute to national development with new ideas, some moves can be attributed solely to the government, despite claims to the contrary. The public's introduction to the details of the relatively small company DeepSeek coincided with Trump's rise to power. Slightly earlier, DeepSeek's AI Assistant app was released and quickly became the top-rated free app on Apple's App Store, surpassing the competing ChatGPT.


The development of the app cost €5.2 million, which is 95% cheaper than its competitor OpenAI, or 100 times cheaper than the chatbot ChatGPT. Behind the company is entrepreneur Liang Wenfeng, born in 1985, a student at a Chinese university who, in 2021, began purchasing chips from the American company Nvidia and founded DeepSeek two years later. The market value drop of Nvidia following DeepSeek's emergence was the largest in the history of the U.S. stock exchange.


Using older types of chips—since the newer versions used by American companies were banned from export to China by Biden—Liang Wenfeng shook the U.S. stock markets, and tech giants, and prompted Trump to suggest that American scientists should spend less money on AI. Billions of dollars were wiped off the value of companies on U.S. stock exchanges, and Trump's donor, advisor, and investor Marc Andreessen wrote on social media platform X that this was a "Sputnik moment" in the world of AI, referring to the shock in Washington when the Soviet Union launched a satellite into Earth's orbit.


Those who tested DeepSeek alongside American competitors said the Chinese model performed better in solving complex problems, coding, and mathematics. Additionally, DeepSeek requires significantly fewer resources than its competitors, including the number of chips, energy consumption, and the learning and training process. Considering that the U.S. has spent billions of dollars and brought in experts from around the world for years, China's achievement is even more impressive.


Liang Wenfeng is not the only Chinese contender. According to available data, there are at least four Chinese companies believed to have developed AI models comparable to leading American ones. Given China's secretive nature, it would not be surprising if there were many other, possibly more advanced, AI models being used by the state.


Political Implications


With DeepSeek, China has shown Washington that sanctions have not stopped it and that it is ready for new battles. The fact that this app is free, while some American apps charge $20 per month, is a significant point. People around the world, even in the poorest countries, now have an AI tool at their disposal. This means that DeepSeek will also improve through its learning from data collected from its global users.


China has shaken Trump's inner circle. Some of his main supporters are from companies that lost hundreds of billions of dollars due to DeepSeek's launch. This act has led others to question whether spending so much on AI is justified, as the invested money might never be recouped.


The money might not be recouped, but the influence gained by leading in this technology is an opportunity that major powers do not want to miss. Many authors believe that the mass application of modern technologies will forever change people's lives.


Strategists in Washington have now realized that the U.S. is not the only one capable of such feats, as China has also challenged American tech giants that have shaped the world in recent years. What, for example, Russia could only dream of doing, China has been doing for years. Here are just a few examples.


Huawei produces high-quality mobile phones, threatening Apple, while simultaneously becoming a leader in 5G technology. The Chinese electric vehicle manufacturer BYD has surpassed the American company Tesla in a short time. CATL lithium batteries, along with the aforementioned BYD, occupy over fifty percent of the global market, and six of the top ten companies on that list are Chinese. Chinese DJI drones are favored on both sides of the frontlines in the largest war of today (the war in Ukraine), and TikTok is incredibly popular in the United States.


In recent years, China has transformed into a global technological power, combining economic strength with modern technologies. Examples include the success of companies like Alibaba, Temu, and Shein, advancements in space technology, and massive infrastructure projects both at home and around the world.


Although many have warned about China's development for years, a large part of the American public has been preoccupied with other topics. The success of DeepSeek has shaken many. Trump was explicit that this is a challenge for American experts to work more and cheaper, meaning they need to redefine their plans. Some on social media have already speculated that Trump might force DeepSeek into compliance, as with TikTok, or simply ban the app and impose sanctions.


There is no doubt that the United States will respond to this Chinese success, as will the largest American tech companies, which have no equal in the world in this field. Some of them have already suggested that DeepSeek may have taken their solutions without permission, but they will investigate the entire case.


In an interview with Chinese media, Liang Wenfeng stated that China is one to two years behind American companies in AI development. Whether this is true is hard to assess, but there is no doubt that China is the only country currently capable of matching the United States in areas where the world's greatest power has dominated for decades.



This article was previously published on the news portal nap.ba.

 

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