China’s AI sector is booming with surging investment and talent a year after DeepSeek’s low-cost model challenged US dominance in the field.
BEIJING: China’s artificial intelligence sector is buzzing with confidence and capital a year after the breakthrough of homegrown firm DeepSeek.
The January 2025 release of its low-cost generative AI model, performing at a level similar to top US chatbots, upended assumptions of American dominance.
This galvanised the local scene despite geopolitical hurdles and global bubble fears.
“It gave a lot of people confidence that China’s AI community previously lacked,” entrepreneur Wu Chenglin told AFP.
His startup DeepWisdom, which had nearly folded three times before, raised RM142 million in two funding rounds over the past year.
Investor enthusiasm has surged dramatically since the DeepSeek shock.
Jinqiu Capital vice-president Shi Yaqiong reported a “clear surge” in competition among investors.
“The kind of projects with an initial valuation in 2024 of USD 10-20 million were, in 2025, expected to have initial valuations around USD 20-40 million,” she said.
Shares in leading Chinese AI startups Zhipu AI and MiniMax soared on their Hong Kong market debuts this month.
Frenzy over AI’s potential is driving global stocks to record highs, led by chipmakers and tech giants.
This euphoria has sparked fears of a market crash, with investors hyper-focused on any sign the AI bubble could burst.
Access to top-end chips made by US giant Nvidia remains restricted in China under White House policies.
Young developers, however, remain undeterred.
At a recent Beijing networking event, discussions buzzed about the industry’s future.
Entrepreneur Li Weijia suggested chip controls mean Chinese AI is more likely to be “open-source and cheap” which could make it more useful to society.
China is said to enjoy an “engineer dividend” with talent flocking to the field.
Online hiring platform Zhilian Zhaopin reported a 39% increase in applications to AI-related jobs in the first three quarters of 2025.
“For a very long time, we didn’t have a good cost-efficient model,” said ideaFlow founder Shen Qiajin.
DeepSeek has now filled that gap.
The company began in 2023 as a side project of a Hangzhou-based hedge fund co-founded by Liang Wenfeng.
It held a cache of powerful Nvidia processors.
Today, DeepSeek holds 4% of the global market share for chatbots, according to Similarweb.
ChatGPT dominates at 68% while Google’s Gemini is at 18%.
DeepSeek’s decision to make its systems’ inner workings public has boosted adoption by developers and businesses.
Counterpoint Research’s Neil Shah said its tools have had “strong adoption in cost-sensitive emerging markets”.
Western users remain more cautious “primarily on account of privacy and national security concerns”.
The domestic Chinese market is enormous.
By June 2025, over half a billion Chinese internet users reported having used generative AI products.
Entrepreneur Yang Yiwen said her parents had their first meaningful AI encounter last Chinese New Year.
They watched her use DeepSeek to plan a family trip.
“They found it quite fun,” she said.
