The open secret behind DeepSeek’s success – Asia Times
It has become popular among Western analysts to speculate about the economic “miracle “‘s demise.
Slowing development, a worried real estate sector, and demographic shifts are frequently used as indicators of the situation. This tale has been further fueled by conflicts with the US, particularly during the previous two services.
Yet the photo is far more complex. Washington has so far avoided the broadest taxes and actions that his campaign speech suggested were a done deal under the administration of President Donald Trump.
However, three times before his commencement, Trump remarked:” I anticipate that we will solve many issues along, starting straight away. We talked about business balance, Fentanyl, TikTok, and several different topics. President Xi and I will do everything in our power to improve peace and security around the world.
These remarks suggest an implicit acknowledgement that China’s market is evolving, no collapsing – and that the United States, despite its speech, understands Beijing’s structural swings.
State-led rise to private-sector vitality
China’s first success was really driven by export-led production and state-owned weighty industry. Now, more than 65 of the 69 Taiwanese companies on the Fortune Global 500 are state-owned.
In recent years, Beijing has pushed for SOE mergers to boost “national warriors”, particularly in strategic areas. At a glance, such deeds might strengthen the tale of status dominance.
Yet the earth is evidently shifting. In the late 1990s, state-owned enterprises ( SOEs ) accounted for more than half of China’s industrial output. Nowadays, they produce almost 30 %. Private companies have become the website of productivity gains and job creation in the economy.
More than 60 % of GDP and more than 50 % of tax revenue are now made up by private companies. Consumption, long overshadowed by investment and exports, has risen in importance – from 35 % of GDP a decade ago to nearly 55 % by 2023.
By enabling greater access to medical facilities and improved funding options, innovative policies support private players. The goal is simple: maintain proper state control while utilizing the private sector’s vitality.
DeepSeek: technology with Chinese features
An example of this private-sector vitality is DeepSeek, founded by hedge fund manager Liang Wenfeng. A groundbreaking AI system developed on a relatively small budget, the company recently unveiled its R1 large language model ( LLM).
DeepSeek’s path challenges the notion that Chinese businesses rely only on state-driven technology. Instead, its story highlights the ability of the private sector to overcome local obstacles and physical limitations.
DeepSeek made novel teaching methods and “pure reasoning capabilities” without any controlled data, while rejecting the usual model of enormous resource investment seen in America. This is a step taken in the direction of an impressive path that deviates quickly from European norms.
DeepSeek developed unique marketing techniques to completely apply less strong GPUs, a miracle that has surprised US researchers because of hardware restrictions imposed by sanctions.
Using only 2, 048 Nvidia H800 GPUs and US$ 5.6 million, it trained a unit with 671 billion guidelines – close to efforts by British giants like as OpenAI and Google, which usually spend multiples of that number.
For Beijing, modern self-reliance has long been an economic feature of strategic goal. At a recent conference of companies with Premier Li Qiang, China’s second-most powerful chief, the communication was blunt:” Focus efforts to break through key main systems”.
DeepSeek’s victory coincides with this perspective. The company’s “local-first” method, which places its employees with PhDs from Foreign universities, best exemplifies Beijing’s wider plan to cut down on foreign tech while cultivating local talent. It is a part of a larger effort to create a self-sustaining development ecosystem that can withstand forces from both the world and the world.
From council lines to systems
Yet now, China’s economic development is usually misconstrued as a shift away from production. In fact, it is a move up the value chain.
The region continues to utilize its great developing skills, built over years, to occupy high-tech sectors such as renewable energy, electric cars and AI. DeepSeek’s increase mirrors the broader path of corporations like Huawei and ByteDance, which have transformed from followers into global entrepreneurs.
At the same time, China leads the world in AI-related patents and boasts one of the largest pools of graduates in science, technology, engineering and mathematics. More than 40 % of GDP is made up of the country’s digital economy, led by e-commerce giants Alibaba and JD.com.
Newcomers like DeepSeek are pushing the limits by demonstrating that even global-scale AI can be produced on smaller budgets when combined with the right combination of technical expertise and business acumen.
One of the most critical, yet sometimes overlooked, aspects of China’s continued economic strength is its unrivaled industrial and production base. This ecosystem, painstakingly built over decades of export-led growth, is not simply about low-cost assembly.
It is a vast, integrated network of suppliers, logistics hubs, specialized clusters and infrastructure that supports a range of high-value industries.
- Scale and Integration
China’s network of factories is unmatched in terms of breadth and depth. From basic components to sophisticated semiconductor machinery, the country’s supply chain spans virtually every sector. Clusters of specialized suppliers allow companies to iterate quickly, reduce costs, and rapidly scale up production. This structural advantage has proven invaluable in high-growth areas like electric vehicles, batteries, and consumer electronics. - Robust Infrastructure
A highly effective transportation network that streamlines the flow of goods has been the result of massive public investments in roads, rails, and ports. China has a lot to do with maintaining its reputation as the “world’s factory” because of its ability to move large amounts of materials across long distances at affordable prices. In turn, this infrastructure underpins the development of cutting-edge sectors—from biotech to AI hardware. - Economies of Scale and Rapid Prototyping
Nowhere else can businesses move as quickly and affordably from concept to mass production as they can in China. Thanks to a dense network of component suppliers, R&, D centers, and testing facilities, Chinese firms can compress development cycles, a vital advantage in fast-moving fields such as renewables and advanced electronics. This synergy fuels innovation by allowing ideas to be tested, refined, and brought to market quickly. - Policy Support for Upgrading
Beijing actively promotes the modernization of traditional manufacturing. Initiatives like” Made in China 2025″ channel resources into high-tech industries, including robotics, aerospace, and new energy vehicles. These regulations also promote collaboration between SOEs and private companies, fostering innovation while protecting crucial sectors. The end result is a manufacturing ecosystem that is constantly moving up the value chain, as demonstrated by the success of businesses like DeepSeek, which profit from local suppliers of AI hardware and services.
This industrial backbone is more than just a piece of China’s past; it serves as a fundamental framework for the onset of its economic transformation. Companies developing large language models, EV batteries, or green technologies can tap into a powerful base of suppliers, technicians, and engineers, enabling them to iterate faster and scale more efficiently than competitors elsewhere.
China’s ability to move toward cutting-edge industries without giving up its manufacturing roots is supported by this synergy.
Against this backdrop, predictions of China’s imminent downfall appear short-sighted. The country’s current challenges, such as high youth unemployment and the real estate sector’s recalibration, are significant but not unique. When at comparable stages of development, major economies have experienced similar transitions.
When America’s GDP was roughly China’s current size, it grew at an average of 2.4 % annually. By contrast, China posted growth rates of 5.4 % in 2023, 5 % in 2024 and is projected to maintain 4%-5 % growth through 2025.
These figures, while lower than the double-digit expansions of the past, remain impressive for an economy of China’s scale. And with a GDP per capita of$ 12, 970 – significantly below the U. S. level of$ 83, 000 – China still has ample room for” catch-up” growth, especially as it invests more in education, innovation and domestic consumption.
Moreover, even incremental growth in a$ 17 trillion economy adds substantially to global GDP. Beijing appears committed to laying the groundwork for a more stable economic model, one that is more in tune with the burgeoning middle class of some 400 million people, by embracing structural reforms, encouraging private sector innovation, and unlocking household wealth.
Made in the USA, remade in China
Dismissing China’s economy as having “peaked” overlooks its ongoing metamorphosis. The growth of businesses like DeepSeek highlights the entrepreneurial spirit of China’s private sector in fostering innovation and overcoming constraints from outside.
The accomplishments of DeepSeek serve as a framework for a wider narrative of resilience, where challenges are neither insurmountable nor a sign of unavoidable decline.
A more nuanced perspective reveals China’s transition from an export-driven, investment-heavy model to one centered on domestic consumption and technological innovation. Its extensive manufacturing base is being upgraded and redeployed to support a high-tech future, far from being abandoned.
This evolution is a sign of China’s resilience, ingenuity, and capacity for reinvention, traits that continue to shape the opportunities for others in the global economy.
Marcus Loh is a director at Temus, a Singapore-based company that offers digital transformation services. He is responsible for Step IT Up’s business affairs, marketing, and strategic communications.
He was formerly the Institute of Public Relations of Singapore’s President, and he is currently a member of the SG Tech, the largest trade association for Singapore’s technology sector ,’s digital transformation chapter.
