DeepSeek is a heartbeat from communist DeepState

The emergence of Chinese AI DeepSeek brings a new focus to the technology arms race that is well under way and will help define the future. A claimed breakthrough by China could herald a new era of cheap AI but it also lifts the stakes in the geopolitical struggle between great powers. The announcement that a Chinese start-up company had found a way to build an AI model for a fraction of the development cost of US rivals up-ended the stockmarket. More than $1.112 trillion was wiped from the value of the world’s largest technology companies known collectively as the magnificent seven – Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla – on Wall Street on Monday.

Australian shares with tech exposure quickly followed.

Tech leaders, including Elon Musk, were quick to question DeepSeek’s claims about the small number of Nvidia chips it had used to develop its AI training models. For ordinary users, that might not matter. As with solar panels, electric vehicles and workshop power tools, consumers have shown themselves to be willing to embrace Chinese products on cost factors alone. This puts a cloud over the multibillions of dollars Big Tech is planning to spend refining AI, and it allows China to drive a big wedge between politicians who want to contain China’s technological reach and citizens who don’t give a TikTok about the geopolitical risks.

As a result, with cheap AI, security concerns about China’s ability to influence Western societies through social media have been taken to a whole new level. Using a Chinese Communist Party AI platform to ask questions of interest will give Beijing a direct pipeline into the knowledge base of sometimes impressionable minds. You don’t have to look far for CCP influence on DeepSeek even from day one. As we reported on Tuesday, for those seeking answers on China, DeepSeek’s flaws were on full display. While it provided answers on the leadership of Donald Trump, Anthony Albanese and Peter Dutton, Xi Jinping was a no-go zone. “Sorry that’s beyond my current scope. Let’s talk about something else,” DeepSeek replied. When asked what was 1989’s Tiananmen Square massacre, it provided the same response.

The wake-up call for the US, and Australia, is that China is making a strong advance in its desire to influence the world’s hi-tech future, and efforts to restrict it are failing. Theoretically, it is hard for DeepSeek to access cutting-edge chips because of US export controls, intended to hinder Chinese organisations from developing innovative AI for military purposes. But the DeepSeek announcement means either the US-designed chips are not necessary to build cutting-edge AI or the ban on Chinese companies accessing them is ineffective.

Either way, the technology arms race has reached a new level, raising hard questions about the feasibility of clunky bureaucratic oversight of the rapidly developing AI world and whether the US will be able to retain its global supremacy despite the hundreds of billions of dollars that companies, including the magnificent seven, have pledged to its development.

As Technology Minister Ed Husic has rightly said, China has been determined since the last decade to be a world leader in artificial intelligence. He said it came as no surprise the Chinese would try to develop a workaround to some of the restrictions that have been placed on them. But he is right to warn users to be “very careful” about downloading DeepSeek on to devices. It dramatically ups the ante on efforts to restrict the CCP’s technology reach beyond social media. DeepSeek is only a heartbeat from the CCP DeepState and this should be of grave concern to more than those who seek their fortunes on the financial markets.