The United States and China are not only locked in a growing tariff war that could drag the world economy into a recession but also stuck in an increasingly fierce competition in the field of artificial intelligence. So far, the US is seen as the leader in AI technologies but that does not necessarily mean it can simply declare itself the winner in the AI contest.
The so-called DeepSeek effect – the revolutionary impact of the technologies developed by China’s home-grown AI start-up DeepSeek – has shown how Chinese AI can exert vast influence and power.
Just a few weeks after DeepSeek’s dark-horse success made global headlines, Chinese President Xi Jinping hosted a rare gathering of Chinese technology entrepreneurs, including Jack Ma, founder of Alibaba Group Holding (which owns the South China Morning Post) and rising star Liang Wenfeng, founder of DeepSeek. Xi’s message to the technology leaders was simple and direct: use new technologies to help to grow the Chinese economy.
China’s top-down approach to policymaking can allow the country to quickly reap economic benefits from its efficiency. After Xi’s February meeting, local governments in places from Shenzhen (home to many well-established tech companies like Tencent and Huawei Technologies) to Shanghai (the birthplace of popular apps such as Instagram-like RedNote and Temu, the shopping platform which is competing with Amazon for a new generation of global e-commerce consumers) began to throw their support behind AI developments in the hope of cultivating the next DeepSeek.
On the regulatory side, China, which has been studying the European Union’s AI Act, the world’s first legal framework for artificial intelligence, is moving away from more comprehensive, risk-based regulation, with officials warning about the dangers of overregulation, including of China falling behind in the AI race. This is especially in the wake of DeepSeek’s success, as the Chinese government looks to encourage AI development in a more flexible regulatory environment.
Across the EU, tech companies have raised concerns over AI regulation enforcement challenges and high compliance costs, amid fears of overregulation stifling AI competition. In contrast, China set up an AI technical standards committee under the Ministry of Industry and Information Technology late last year, and is now focusing on the regulation of real-world AI applications such as generative AI through agreed-upon standards to support industrial and economic development.
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