Will AI enhance superpower tensions?

We are living in an age of instant knowledge, where anyone can receive any information they need at a push of a few buttons on a touch screen or keyboard. So, it’s not surprising, given the immense competition between private companies in new, innovative sectors that everyone wants a piece of the huge AI sales revenue pie. Especially in the US, billions of dollars are being invested, or often simply just given to private companies (such as OpenAI) to be the fastest, and highest quality Artificial Intelligence Software.

However, more recently a new competitor seems to have entered the market. This company is called Deepseek. The company itself is owned by a large Chinese hedge fund called High-Flyer, who set up Deepseek simply as a side project (Goodwin. G, 2025). But as of this week, it seems to be competing with its heavily invested in American counterparts. And it’s not doing too bad. Last week, Deepseek AI was the most downloaded app on the apple app store at the end of January (Sensor Tower, 2025), and its software surpasses many other AI chatbot systems, including beating Google Gemini on quality, and beating the expensive OpenAI- o1 system on price considerably, whilst only having a slightly lower quality rating (reported from AI model and API providers analysis, 2025).

Since this product was released, OpenAI have responded with a better free version of their original product with the 03- mini.

This raises the question, could there be tension between the US and China due to the sudden increase of AI quality in China? In reality, this tension hasn’t just appeared because of Deepseek. The strain in relations began to rise in 2022, when the US ordered popular artificial intelligence chip producer Nvidia to reduce their sales to China (BBC News 2022). This includes the A100 and more powerful H100 chips that Nvidia produces, and recently the slower A800 and H800 chips that Nvidia specifically used to produce for the Chinese market (Leswing. K, 2023).

In simpler terms, China’s AI making capabilities were significantly reduced by the US, and they were able to make a system on the same level as the US, which have also spent billions more than Deepseek.

This is what makes Deepseek’s achievement even more stunning, as they are utilising worse performing chips than American competitors whilst producing similar results, and spending considerably less (Stew. M, 2025). This is mostly due to their technique of accessing information, which uses an ‘expert system’ (ibid.), something very similar to how we access information in our daily lives, like how we talk to a doctor about health but a nutritionist for eating habits. In this way, it only uses around 37 billion active at a time. The traditional models have 1.8 trillion parameters open at a time (ibid).

Furthermore, Deepseek is operating as an open-source software (Rowe. A, 2025), meaning that with the push of a few buttons, you could add Deepseek to your laptop or computer locally. This means that the extensive operations that make Deepseek a great AI operating system are free for the rest of the world to see. If someone had the same number of processors as Deepseek, they could practically make the same software. This practically means that with the right finance (which is still a lot of money) anyone could make a software like Deepseek.

Whilst OpenAI have responded with a better free AI, America still needs to understand that the rest of the world can now compete. If demand for American AI systems is instead rerouted to its Chinese counterparts, it is likely that more tariffs and sanctions on American-based chip makers exporting to China will come. If China does the same, this could start a trade war, which Is already close to occurring due to Trump’s current tariffs on exports from China. This tension can only increase with one of the US’ key sectors being under threat.

However, there is a more sensitive reason that Deepseek could disrupt relations between China and the US, the usage of the personal information of American citizens. Experts have claimed that Deepseek ‘represents a clear risk to any enterprise whose leadership values data privacy, security and transparency’ (ITV, 2025). And whilst it was claimed that this is the case for all large language models, this does not account for the fact that Deepseek is storing data in China. This could cause unknown risks as the adoption of the National Intelligence law in 2017 (Mazzocco. S, 2023) ‘requires all firms in China to accede to government demands to provide information and data as authorities deem necessary to protect China’s national security’. This law has always been an issue with Chinese or Chinese- related companies with operations in America such as TikTok, and therefore this has and always will be a large threat to American citizens.

Therefore, of course more tension will be caused, but this is likely to not affect the average person, especially in the short-term. Tariff retaliation on cars and energy is likely to be a larger issue for consumers, however this is not due to AI. For business owners looking to integrate AI into their operating systems, this should overall make the process easier and cheaper over time. Recently, the US and China have had unstable relations, and this is likely to continue.

Bibliography:

AI Model & API Providers Analysis | Artificial Analysis. https://artificialanalysis.ai - Accessed 4 Feb. 2025.

Cox, Jeff. ‘How U.S. Efforts to Restrict China from Nvidia’s Fastest Chips May Have Backfired’. CNBC, 27 Jan. 2025, https://www.cnbc.com/2025/01/27/how-us-keeping-china-from-nvidias-fastest-chips-may-have-backfired.html.

Deepseek: China’s Gamechanging AI System Has Big Implications for UK Tech Development | Bayes Business School. 28 Jan. 2025, https://www.bayes.city.ac.uk/news-and-events/news/2025/january/deepseek-chinas-gamechanging-ai-system-has-big-implications-for-uk-tech-development.

‘DeepSeek’s Chatbot Achieves 17% Accuracy, Trails Western Rivals in NewsGuard Audit’. Reuters, 29 Jan. 2025. www.reuters.com, https://www.reuters.com/world/china/deepseeks-chatbot-achieves-17-accuracy-trails-western-rivals-newsguard-audit-2025-01-29/.

Goodwin, Grace Eliza. ‘What Is DeepSeek? Get to Know the Chinese Startup That Shocked the AI Industry’. Business Insider Africa, 27 Jan. 2025, https://africa.businessinsider.com/news/what-is-deepseek-get-to-know-the-chinese-startup-that-shocked-the-ai-industry/88y6hp1.

ITV. Why Experts Are Urging Caution over New Chinese AI Chatbot Deepseek. Jan. 2025, https://www.itv.com/news/2025-01-29/why-experts-are-urging-caution-over-new-chinese-ai-chatbot-deepseek.

Leswing, Kif. ‘U.S. Curbs Export of More AI Chips, Including Nvidia H800, to China’. CNBC, 17 Oct. 2023, https://www.cnbc.com/2023/10/17/us-bans-export-of-more-ai-chips-including-nvidia-h800-to-china.html.

Lorica, Ben. ‘Beyond Imitation: How Reinforcement Learning Is Reshaping AI Reasoning’. Gradient Flow, 23 Jan. 2025, https://gradientflow.com/how-reinforcement-learning-is-reshaping-ai-reasoning/.

Mazzocco, Scott Kennedy, Ilaria. ‘Can Chinese Firms Be Truly Private?’ Big Data China, 7 Feb. 2023, https://bigdatachina.csis.org/can-chinese-firms-be-truly-private/.

Nellis, Stephen, and Karen Freifeld. ‘Nvidia Says DeepSeek Advances Prove Need for More of Its Chips’. Reuters, 27 Jan. 2025. www.reuters.com, https://www.reuters.com/technology/nvidia-says-deepseek-advances-prove-need-more-its-chips-2025-01-27/.

Rowe, Adam. ‘What Is DeepSeek? China’s New AI Is Now Open-Source’. Tech.Co, 28 Jan. 2025, https://tech.co/news/what-is-deepseek.

Stew, Martin. ‘DeepSeek: What Is the New Chinese AI App Losing Investors More than $1trillion?’ ITV, Jan. 2025, https://www.itv.com/news/2025-01-27/ai-investors-could-lose-more-than-1-trillion-as-new-chinese-app-dominates.

Tower, Sensor. ‘Top Grossing Apps | US | Top App Store Rankings for iOS’. Sensor Tower, https://app.sensortower.com/top-charts?category=0&country=US&date=2025-01-27&device=iphone&os=ios. Accessed 4 Feb. 2025.

‘US Orders Immediate Halt to Some AI Chip Exports to China, Nvidia Says’. BBC News, 25 Oct. 2023. www.bbc.co.uk, https://www.bbc.com/news/business-67213134.

‘US-China Chip War: How the Technology Dispute Is Playing Out’. BBC News, 16 Dec. 2022. www.bbc.co.uk, https://www.bbc.com/news/business-63995570.

‘Why DeepSeek Is Different, in Three Charts’. NBC News, 28 Jan. 2025, https://www.nbcnews.com/data-graphics/deepseek-ai-comparison-openai-chatgpt-google-gemini-meta-llama-rcna189568.