Open without fuss: the secret of the AI explosion in China this round

Author: Yu Shaoqing

China's economy has not yet emerged from the trough, but with DeepSeek's unexpected breakthrough in the field of AI large models, technology stocks are undergoing asset revaluation, and the recovery of the Chinese economy is also seeing the dawn.

It's clear that the positive feedback from DeepSeek continues. Starting from February 24, DeepSeek announced the launch of "Open Source Week", and the first open source codebase is Flash MLA, which will further benefit cloud vendors and data centers to facilitate them to further "squeeze" the computing power with chips.

The popularity of DeepSeek has not only attracted hundreds of millions of ordinary users to download, but also promoted the access of government departments in Shenzhen, Shenyang, Dongguan, Guangzhou and other places, and made Tencent, a technology giant that was originally cautious in AI, choose to bet on DeepSeek. At present, Tencent Yuanbao App has surpassed Byte's Doubao in the Apple Store's free download list, second only to DeepSeek; In Huawei, Xiaomi, vivo and other app stores, Tencent ingots are in the first place.

A group of technology giants represented by Tencent and Ali are trying to catch the technology dividend brought by the open source of DeepSeek, and then through billion-level application scenarios, to achieve the diffusion of the above-mentioned technology dividend, which undoubtedly helps narrow the overall gap between China and the United States in AI development.

DeepSeek was established in May 2023, less than two years ago. However, in the two years from the end of 2022 to the present, China has shown remarkable art of policy adjustment: on the one hand, against the backdrop of the 'decoupling theory', it has established the policy orientation of 'further expanding opening up', attracting foreigners to travel, do business, and invest in China with the continuous expansion of visa-free policies; on the other hand, in the context of insufficient confidence in the development of the private economy, it has successively launched hundreds of policies to promote the development of the private economy, established the Private Economy Development Bureau under the National Development and Reform Commission, and cracked down severely on the phenomenon of 'distant water fishing', and so on.

!

China Development High-level Forum 2024 Annual Meeting: Bai Zhongen, Dean of Tsinghua School of Economics and Management, in dialogue with Apple CEO Tim Cook

Maintaining an open attitude towards the outside world and inclusiveness in development internally are fundamental conditions for the breakthrough of China's technology industry. However, when summarizing the reasons for the success of DeepSeek's lone advancement, two extremely bad voices have dominated the mainstream. First, DeepSeek's team mainly consists of graduates from domestic universities, so China can achieve independent research and development even when it closes its doors; second, DeepSeek's success comes from the keen and precise support of local governments.

The first view reverses the basic logic. Since the outbreak of the trade war and technology war between China and the United States in the spring of 2018, China has been more open than the United States while maintaining a "-for-tat" strategy. Especially after the emergence of ChatGPT in 2022, China's intellectual, industrial, and policy circles have collectively reflected, and the vast majority of people agree that the United States is further widening the gap with China in cutting-edge technology. Under this sense of crisis, China can bear the burden of humiliation, actively promote people-to-people exchanges between China and the United States, including academic and business exchanges, and resolutely curb the trend of decoupling.

Therefore, the success of DeepSeek is first built on the foundation of OpenAI, which is acknowledged by Liang Wenfeng himself. Secondly, precisely because the United States believes that it can block Chinese technology by using the 'small courtyard and high walls' approach, it has instead led to young Chinese technology researchers going against the grain and achieving significant breakthroughs in engineering technology, greatly reducing the dependence on computing power. It can be said that the most closed and conservative United States since World War II has paid a price for its closure in the competition with China in AI, while China, by choosing the open-source DeepSeek, has won both victory and respect.

The fatal flaw of the second viewpoint lies in an excessive belief in the government's 'effective' capabilities. If the local government clearly understood the value of DeepSeek, it should have vigorously promoted it as early as May 2024 after the release of the V2 version, rather than waiting for the dual certification of Silicon Valley engineers and Wall Street analysts 8 months later. 'Greatness cannot be planned.' Going back to the birth background of DeepSeek, its parent company is engaged in quantitative trading - a financial operation method that is not favored by regulatory authorities. But what Hangzhou did right is to choose to allow many unclear and in a fuzzy area market behaviors to proceed.

In January 2024, the China Securities Regulatory Commission (CSRC) issued new regulations on securities lending business, including: (1) a complete suspension of the lending of restricted shares; The second is to adjust the market-based agreed declaration of refinancing securities from real-time availability to next-day availability, and limit the efficiency of securities lending and lending. Some analysts believe that it will have the greatest impact on quantitative institutions

Hangzhou is a major stronghold for the development of China's private economy. In 2024, the number of companies selected for the Top 500 Private Enterprises in China reached 36, surpassing Shenzhen's 27, ranking first among all cities. In places with a developed private economy, the emergence of a service-oriented government is required, as well as the emergence of a limited government. As the saying goes, 'when the water is clear, there are no fish.' Hangzhou's past tolerance towards P2P, although resulting in quite painful consequences, also reflects a valuable tolerance towards private finance.

For more than two years, we have persistently promoted further opening up to the outside world, while internally providing support without causing disruptions. The Chinese science and technology industry has gained the opportunity to recuperate and even catch up, unleashing unexpected energy. In addition to large models like DeepSeek, China is also accelerating breakthroughs in the technical capabilities of the semiconductor field.

According to the in-depth analysis report on the technological level of three key areas released by the Korea Institute of Science and Technology Evaluation and Planning (KISTEP) on February 23, the survey results of 39 domestic experts show that by 2024, the technical basic capabilities in the semiconductor field of Korea are comprehensively lagging behind China in all key areas.

It is worth noting that the experts participating in this survey had undergone a similar evaluation in 2022, when they considered South Korea to be leading in areas such as high integration, resistive memory technology, advanced semiconductor packaging technology, next-generation high-performance sensing technology, etc. However, just two years later, the situation has completely reversed.

Now in its fourth year, the Russia-Ukraine war has not only brought Russia into "wartime Keynesianism", but also dragged the whole of Europe into a quagmire of economic and technological stagnation. Interestingly, the Russian-Ukrainian battlefield is the first large-scale use of AI technology by mankind, and AI has penetrated into the entire chain of intelligence, decision-making, strikes, and public opinion warfare on both sides. It is in this context that the explosion of China's science and technology AI industry has shown its precious value.