Economic Turbo Deepseek: China's new AI hope as an economic engine?

Published on: March 22, 2025 / update from: March 22, 2025 - Author: Konrad Wolfenstein

Economic Turbo Deepseek: China's new AI hope as an economic engine? - Image: Xpert.digital

Deepseek in China: Artificial intelligence as a state strategy?

Deepseek: The engine behind China's new business strategy?

The People's Republic of China is increasingly focusing on the AI company Deepseek as a key technology in order to boost economic growth and at the same time strengthen technological sovereignty. After the international sensation for the Deepseek-R1 model in early 2025, the Chinese leadership brought the company from Hangzhou at the center of its economic strategy. Deepseek is not only supported by the highest political levels, but also integrated into numerous areas of state administration and positioned as a symbol for China's AI ambitions.

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The strategic importance of Deepseek for China's economy

The political leadership in Beijing has explicitly declared Deepseek as a growth engine for the Chinese economy, which is currently being weakened by various factors: the trade dispute with the USA is burdening the industrial and export sector, internal consumption is at a low level, and the ongoing real estate crisis provides economic uncertainty in the population. In this challenging environment, Deepseek should serve as an innovation engine that not only drives the technology sector forward, but should also have positive radiation effects on the overall economy.

The Chinese leadership pursues several economic strategic goals with the promotion of Deepseek. On the one hand, the company should accelerate domestic AI development and make China more independent of western technology imports. On the other hand, Deepseek is positioned as a symbol of China's innovative strength to strengthen international trust in the Chinese economy and attract investments.

Deepseek's success already contributes to the positive perception of the Chinese economy. The MSCI China Index and the MSCI China All Shares Index have risen by 34% or 29% in the past 12 months and thus exceeded both the MSCI World Index and the S&P 500.

Highest political support for Deepseek

The meaning that China Deepseek follows is shown in direct support from the highest political levels. State and party leader XI Jinping invited Deepseek founder Liang Wenfeng for a media-staged meeting after Beijing, in which other technology leaders such as Alibaba founder Jack Ma were also present. With this symbolic gesture, XI signaled its will to support the private sector in the technology sector more in the future.

Prime Minister Li Qiang had previously received the Deepseek founder. Liang Wenfeng should bring in his expertise in the so -called work report of the government - the political agenda for the coming year. The inclusion of a relatively new company in national political design underlines the strategic importance that Beijing Deepseek supports.

After the meeting with XI Jinping, Deepseek's technology was integrated into various areas of Chinese bureaucracy. Dishes use Deepseek to write judgments within minutes; Doctors in Fuzhou use the technology to create treatment plans; In Meizhou, Deepseek answers inquiries to a state hotline; And in Shenzhen, the technology supports the search for missing persons by analyzing surveillance videos.

Deepseek in the context of the Chinese AI strategy

The promotion of Deepseek is part of a more comprehensive Chinese AI strategy that was formalized in 2017 with the “Development Plan for Artificial Intelligence of the Next Generation”. This plan divides China's AI development in three phases: by 2020 China should reach the global state of the art; By 2025, the domestic AI sector is to grow to a value of around 55 billion euros; And by 2030, China is aiming to become the world's leading innovation center for AI.

Deepseek fits perfectly into this long -term strategy. The company demonstrates China's ability to develop advanced AI models that can compete with western offers. In addition, Deepseek shows that China is able to find innovative solutions despite US export restrictions on high-performance chips-the company has developed its model with significantly lower costs and less powerful chips than comparable US companies.

At this year's National People's Congress meeting, KI was explicitly referred to as part of the “new quality productive forces” with which China wants to boost its economic growth. The government promised to "support the comprehensive use of AI models on a large scale". Deepseek is presented as a showcase project that symbolizes the renewed support of the government for innovative technology companies.

Hangzhou as an emerging AI metropolis

Deepseek's hometown Hangzhou strives to establish itself as China's new tech metropolis. The city has embedded Deepseek and other technology companies in the “Hangzhou Chengxi Science and Technology Innovation Corridor” - a state -funded project that aims to create a Chinese equivalent for Silicon Valley. This is also referred to as “China's Vision Valley” and is to become the center for “a new generation of AI innovation and development”.

The Zhejiang Lab, a research institution organized by the provincial government, the Zhejiang University and the Alibaba Group, serves as a hub for technology research in the region. It is referred to by the Chinese Ministry of Science and Technology as the “core soul” of the Hangzhou Chengxi Science and Technology Innovation Corridor. This facility not only supports local research, but also organizes recruitment events to lure talented scientists to Hangzhou.

Economic effects and international dimension

Deepseek's surprising success not only caused a sensation in China, but worldwide. When the company published its R1 model in January 2025, US technology shares significantly lost value. The chip manufacturer Nvidia alone lost around $ 600 billion in stock market value. This market reaction illustrates the perceived threat to the US technology leadership.

Ironically, the US export restrictions for high-tech chips may have achieved the opposite of their intended effect. The restrictions would have forced Deepseek to “train more efficiently”, said Jeffrey Ding, professor at George-Washington University. The company developed innovative methods such as the “Mixture of Experts” technology, in which only relevant parts of the model are activated for specific tasks, which requires less computing power.

Despite geopolitical tensions, Deepseek arouses new interest in Western investors to China. The skepticism of the Chinese market has been as great among western investors in recent years, but Deepseek could provide a surprising turn. The company itself is now considering external financing to support its rapid growth. In addition to Chinese companies such as Alibaba and state -related funds, international investors have also signaled interest.

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China's balancing act: Innovation promotion versus control at Deepseek

Despite state support, Deepseek faces considerable challenges. The company needs more powerful hardware for its further development, but has limited access to modern Nvidia chips due to the US export restrictions. Deepseek therefore consider the use of data centers in Southeast Asia in order to gain access to more Nvidia chips.

There are also reports that Deepseek has banned the leading employees of the political leadership to travel abroad. It was feared that they could stay there or pass on to foreign competitors. This measure illustrates the balancing act of Chinese leadership between the promotion of innovation and the desire for control.

Abroad, Deepseek's successes have triggered concerns about censorship, security and data processing. Government authorities in Australia, South Korea and Taiwan have instructed their employees not to use the services of Deepseek. In a letter to the White House, Openaai warned that Beijing Deepseek could force his models to manipulate to cause damage.

Deepseek in the Chinese AI competition environment

Deepseek is not the only important AI company in China. Established companies such as Cambricon (market capitalization: $ 34 billion), Iflytek ($ 16.6 billion) and Sensetime ($ 7.1 billion). There are also the so -called “six Tiger” - Stepfun, ZHipU, Minimax, Moonshot, 01.AI and Baichuan - the promising newcomers.

The large Chinese technology groups are also active in the AI area. Baidu recently presented two new models: Ernie 4.5 and Ernie X1. The latter should offer the same performance as Deepseek R1, but only half cost. Alibaba with Qwen and bytedance with Doubao have also developed powerful voice models.

What distinguishes Deepseek from its competitors is the special support from the government. While other companies are also promoted, none was positioned as clearly as Deepseek as a national hope. This special position brings advantages in integration into government structures, but could also lead to increased pressure to meet expectations.

Deepseek as a symbol of China's AI ambitions

In a short time, Deepseek developed from a side project of a hedge fund to a central element of the Chinese economic strategy. The promotion of the company through the highest political levels and its rapid integration into state structures illustrate the importance that China supports AI technology for its economic future.

In response to the increasing technological competition with the USA, China Deepseek positions as a symbol of its innovative strength and as proof that despite trade restrictions, it is able to develop worldwide leading technologies. The economic success of the company and its positive impact on market perception show that this strategy is at least partially rising.

Nevertheless, China is faced with the challenge of managing the balancing act between political control and economic freedom. For the long -term development of Deepseek and other innovative companies, it will be crucial that the government offers the right degree of support without suffocating the creativity and adaptability that is essential for success in the fast -moving technology sector.

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