
It shouldn’t have come as a complete shock.
US tech stocks, especially chipmaker Nvidia, plunged on Monday after news that the small China-based company DeepSeek had achieved a dramatic and reportedly inexpensive advance in artificial intelligence. But the step forward for China’s AI industry was in fact foreseeable.
It was foreseeable from ASPI’s Critical Technology Tracker, which was launched in early 2023 and which in its latest update monitors high-impact research (measured as the 10 percent most highly cited publications) over two decades across 64 technologies, including machine learning and natural language processing (NLP).
While high-impact research isn’t the full picture, it is a leading indicator of scientific innovation right at the beginning of the lifecycle of a technology. As we argued in our August 2024 update, scientific innovation needs to be nurtured through every step of the lifecycle, notably through commercialisation for economic gain.
The two-decade Critical Technology Tracker report showed that China’s consistent investments in science and technology were paying off, with steady gains in its global share of high-impact publications in machine learning over the previous two decades. In this ascent, China overtook the United States in their yearly global share of highly cited publications in 2017.
ASPI has shown that between 2019 and 2023, 36.5 percent of high impact research in this field was published by Chinese institutions, compared with 15.4 percent by the United States. In NLP, the race is tighter, with the US’s and China’s global share of publications neck-and-neck in the same five-year period, at 24.8 percent and 24.1 percent, respectively.
ASPI’s research has also shown that, of the world-leading institutions in machine-learning research, the top five were in China. Tsinghua University, the alma mater of several key researchers behind the latest DeepSeek model, ranked second. ASPI’s Critical Technology Tracker also ranks Tsinghua University third in research in natural-language processing, behind only Google and the Chinese Academy of Sciences.
Chinese technology firms have been increasingly tapping into the growing pool of indigenous talent. Last year, DeepSeek’s founder, Liang Wenfeng, emphasised that the core research team was ‘all local’ and included no one who had trained or done extensive work abroad—though some members did have work experience in foreign operations inside China, such as Microsoft Research Asia. The Financial Times reports that Liang formed his AI company by combining an excellent team of chips experts with the best talent from a hedge fund he had co-founded.
AI is just the latest technology in which we have seen Chinese companies challenge the established dominance held by US or European companies. Solar cells, electric vehicles and smartphones are all technologies in which Western companies held and lost early advantages. ASPI’s data shows that China has in fact surpassed the US in cutting-edge research for 57 out of 64 technology areas; 2016 was an inflection point.
The global AI industry is still weighted in favour of the US in share of pioneering tech companies. But as DeepSeek’s announcement emphasises, US and other Western countries should have no great confidence in keeping their leads. In fact, any confidence should be called out as complacency.
So, the Trump administration’s commitment to making America great again in technologies is certainly welcomed. The big example so far is the announcement on 21 January of the US AI infrastructure joint venture Stargate, into which US$500 billion ($800 billion) is to be invested.
DeepSeek’s release makes it clear that now is not the time for half-measures or wishful thinking. Bold decisions, strategic foresight and a willingness to lean in to the AI race is vital to maintaining a competitive edge, and not just by the US.
ASPI’s Critical Technology Tracker is clear in another regard: that we should be ready for similar advances by China in other technological domains. Let’s hope that DeepSeek really is the wakeup call needed and likeminded countries now take the action needed to avoid being shocked again—not just in AI, but in all critical technologies.