Authored by Pepe Escobar,
When President Xi Jinping hosted a recent – rare – meeting with an array of Chinese tech superstars, including a “rehabilitated” Jack Ma, Alibaba’s founder, he urged them to “show their talent”, code for going for broke in the tech war with the U.S.
It was no wonder that young Liang Wenfeng, founder of AI sensation DeepSeek, was among the guests.
DeepSeek threw not only Silicon Valley but the whole somewhat paranoid U.S. national security ecosystem completely off balance. Yet Beijing’s emphasis is not subversion, but a sound drive towards building an AI system totally independent from U.S. monopolistic pressure and Nvidia products. Alibaba, Huawei and Tencent will likely align their infrastructure with DeepSeek.
This process is perfectly synchronized with the Made in China 2025 project, which has already propelled China to the leadership position in several sectors – from electric vehicles, batteries and solar panels to smart grids and advanced manufacturing. The final breakthroughs will be on top semiconductors and aerospace.
It’s now common knowledge that DeepSeek’s development was not a product of Silicon Valley labs showered with billions of dollars of research funds. Liang Wenfeng himself revealed it: “I won’t lie, our AI was created on the basis of Soviet developments – the OGAS system of Academician Glushkov.”
The wonders of History: a Soviet marvel auctioned off for a pittance, $15,000 in 1995 possibly because it was considered worthless, is now the backbone of China’s new digital revolution.
Physics heavyweight Quantum Bird, formerly with the CERN in Geneva, is adamant: “The Americans lost the plot. It’s all about models employing less computing power and less data. Nvidia high-performance GPUs costing $40,000 consume too much energy. Then there’s financial speculation. Raspberry Pi [a small single-board computer], the size of a credit card and with a simple processor, costing $50 for students, they may run DeepSeek, consuming less energy than a cellphone.”
And that’s just the beginning, Quantum Bird adds: “When Russia and China come up with their first lithographic machine… It was Silicon Valley that pushed the world to this.”
Russia-China scientists have already accelerated scientific computing on conventional Nvidia graphics cards by 800 times, creating a new algorithm using reverse engineering.
That was pulled off by a joint group of scientists from MSU-PPI University in Shenzhen (MSU-BIT University), established in 2014 by Lomonosov Moscow State University and Beijing Polytechnic Institute.
In parallel, researchers using Made in China GPUs have already boosted 10 times their performance over U.S. supercomputers relying on Nvidia hardware. U.S. tech sanctions? Who cares?
Counterpunching Sanctionmania
Chinese scientists are not intimidated by any challenges. On hardware, production of advanced GPUs like the A100 and H100 is a foreign monopoly. On software, Nvidia has restricted its CUDA software ecosystem from running on third-party hardware; that’s a serious problem for those working on independent algorithms.
These may not be insurmountable problems when a rolling wave of Chinese scientists is coming back home to China mostly from the U.S..
Take Tsinghua University chip superstar Sun Nan. Tsinghua’s social media recently revealed that Sun Nan came back in 2020 after many years in the U.S. to “train chip professionals for China and solving the manufacturing problems of mid- and high-end chip technology”.
The key sectors, once again, are semiconductors and quantum computing. Nothing Trump 2.0 will throw at China in terms of “tech containment” will alter the Chinese drive.
Sun Nan and his team have already come up with high-performance circuit design tech they integrated into more than 50 chips used in the Chinese power grid, high-speed rail, industrial measurement and control, instrumentation and electric vehicles.
Countering the American drive to derail China’s development in AI and chipmaking equipment, interconnected Sun Tzu maneuvers paint the picture of a Chinese transformation of current supply chains, fomenting a tech crisis in the West itself. That is a key reason for Trump’s obsession with Greenland and Ukraine’s rare earth potential.
Sanctionmania has been going on since 2017, when Trump started to impose a 60% tariff on Chinese imports. The Cadaver in the White House administration then slapped a 100% tax on Chinese EVs, and dozens of export controls on China, via coercion of its own “allies” such as Holland’s ASML and South Korea’s Hynix and Samsung.
Trump 2.0 will come up with a renewed charge of the heavy brigade quite soon.
By 2018, China was entirely dependent on Western tech. That was a time when telecom towers came from Ericsson, GPUs and chips for neural networks from Nvidia, and cars from the European giants.
Now it’s a completely different ball game: a blowback game.
Huawei leads in global telecom equipment. BYD is the world’s top producer of electric vehicles – ahead of Tesla since last year. Huawei is ahead of Google in smartphone processor shipments, also since last year. Xiaomi will launch its own smartphone processor this year.
Huawei’s Ascend 910B chip is already just 5% behind Nvidia’s AI products – and 70% cheaper. Huawei is vertically integrated with its own chip design and manufacturing supply chain – offering mobile operating systems (Harmony OS NEXT), electric vehicles, streaming services, and autonomous driving.
How to “directly benefit society”
Apart from DeepSeek, ByteDance, Baidu, Alibaba, and 01.ai have all developed their own sophisticated LLM models.
China not only already leads in industrial AI applications from robotics and drones to autonomous driving; it is also metastasizing its industrial, technological and economic breakthroughs into military power.
Example: the recently launched world’s first 6th generation fighter prototypes – not only one but two, simultaneously; the world’s first drone-carrier; the first hypersonic stealth unmanned airplanes for strike and reconnaissance; the first stealth unmanned warship; and the most powerful long-range air defence systems.
China is advancing at breakneck speed in directed energy weapons, military 5G, atomic timing, and space warfare systems.
As highlighted here, “China’s nuclear fusion device Experimental Advanced Superconducting Tokamak (EAST), Physics World wrote, ‘produced a steady-state high-confinement plasma for 1,066 seconds, breaking EAST’s previous 2023 record of 403 seconds’. This last development is an advance for the potential of a fusion power plant, a promise of almost limitless clean energy without significant radioactive waste.”
China trades mostly with the Global South: more than 50% of total. Trade with the U.S. is less than 3% of its GDP – as of last year.
This is a about China’s Digital Silk Road progress across Eurasia Economic Union (EAEU) member states.
Here we see how China is shaping the EAEU geostrategically, positioning itself at the heart of high-tech and innovation in Eurasia, promoting advanced tech cooperation with Russia, Belarus, Kazakhstan and Kyrgyzstan. China’s tech companies all but conquered the EAEU high technology markets.
The mantra uniting all of the above is of course detailed planning. That includes for instance the “East data, West computing” drive, which aims to transfer data-intensive computing to western China to reduce energy strain in the east.
The absolute key battleground in the tech war ahead will of course be the Global South. China is relentlessly leveraging its notorious manufacturing dominance and massive financial backing to offer an alternative ecosystem in semiconductors and AI.
In sharp contrast, the Americans under Trump 2.0 predictably will coerce their allies/vassals to reinforce their own tech ecosystem. Total divergence in supply chains and tech standards is all but inevitable.
This July 2024 interview with Liang Wenfeng, originally published in China by An Yong, remains essential to understand what’s behind the Chinese drive to totally redefine the rules of tech innovation.
Liang Wenfeng is adamant: “We’re done following. It’s time to lead.” He sees competition in crystal clear terms: “I focus on whether something can elevate social efficiency (italics mine) and whether we can increase our strength in the value chain (…) It’s an honor (italics mine) to give back.”
As Chinese scholar Quan Le has noted, Liang Wenfeng’s
“intention of enhancing personal and collective creativity, thus directly benefitting the society, is not at all on the same epistemological level” of a “mindless consumerism society”. It’s about the common good, not about a Wall Street killing.
All’s set for a do-or-die U.S.-China tech duel ahead. No one really knows what a bombast-driven Trump 2.0 administration will come up with. There will always be an undercurrent of economic pragmatism, but that will be constantly offset by an ideological and strategic Iron Wall dividing both parties.
Meanwhile, China will keep betting on a stream of young innovators and entrepreneurs in business tech to somewhat bridge the divide. The Empire of Chaos will not take the competition lightly. The Middle Kingdom is unfazed – and ready to rock’n roll.
