AI's 'Sputnik moment'? Competition makes technology grow, not bans

Editor's note: Jessica Durdu, a special commentator on current affairs for CGTN, is a foreign affairs specialist and PhD candidate in international relations at China Foreign Affairs University. The article reflects the author's opinions and not necessarily the views of CGTN.

In recent months, the technology sector has witnessed a significant shift with politicians talking more about securitized core technological developments than engineers. First the Huawei case and then TikTok proved the one-sided U.S. targeting of basically anything Chinese.

The U.S. ban on TikTok – currently on hold – has failed to prevent American users from flocking to other Chinese-developed applications. When TikTok's fate hung in balance, another Chinese app, RedNote, surged in popularity, quickly becoming a preferred alternative for content creation and sharing.

This trend underscores a critical paradox: While American consumers choose Chinese tech for its superior performance, the U.S. government continues to frame successful Chinese technology companies as existential threats rather than as competitors in a globalized market. 

Now the discussions are driven by the breakthroughs from Chinese artificial intelligence (AI) company DeepSeek. The new development not only highlights China's growing AI capabilities but also raises questions about the effectiveness and fairness of U.S. sanctions aimed at restricting China's technological advancement.

If history is any indication, restrictive measures rarely curb innovation; instead, they force it to evolve in unexpected ways. The emergence of the new AI model is a testament to that.

One of the most remarkable AI developments of 2025 has been the launch of DeepSeek-R1, an open-source reasoning language model that rivals OpenAI's ChatGPT models. DeepSeek-R1 has achieved performance on par with OpenAI's o1 in complex tasks such as mathematics, coding and logical reasoning.

What makes this model even more disruptive is its cost efficiency. It is reportedly 20 to 50 times cheaper to operate than its American counterpart, significantly lowering barriers to AI adoption worldwide, especially for underdeveloped or developing countries.

The impact was immediate. Following its launch, DeepSeek's chatbot application became the most downloaded app on Apple's App Store, outpacing all competitors. This, in turn, triggered a historic reaction in financial markets.

Tech stocks, particularly those of AI hardware providers such as Nvidia, experienced a sharp 17 percent sell-off, with Nvidia losing an astonishing $600 billion in market value in a single day. Many in the industry have called this event "AI's Sputnik moment."

What makes this development even more striking is that it happened despite the stringent U.S. chip sanctions on China, designed to slow down China's AI progress by cutting off access to high-end semiconductor technology. However, rather than stalling innovation, these restrictions have incentivized Chinese companies to develop alternative, cost-effective solutions. The case of DeepSeek-R1 suggests that not only is China successfully adapting, but it may be redefining the efficiency paradigm in AI development altogether.

The U.S. has long positioned itself as the champion of free markets, open competition and laissez-faire economics. Yet, recent actions suggest a stronger shift towards protectionism that doesn't help the situation. The fundamental question arises: Will the U.S. sanction any foreign company that outperforms its American counterparts rather than foster domestic innovation? If so, how does that align with the principles of an open economy? In a true free market system, competition should drive innovation, not government-imposed barriers.

History offers an interesting contrast. In the early 20th century, the automobile industry was revolutionized by the American company Ford. Before Henry Ford introduced the Model T, German manufacturers were at the forefront of automobile production. However, Ford's innovation in mass production made cars more affordable and widely accessible in the 1900s, ultimately positioning the U.S. as a leader in the automotive sector at that time.

But no country imposed sanctions to prevent Ford from producing cheaper and better vehicles, no country saw Ford cars as a national security threat. Germans did not try to ban any Ford car. Instead, competitors had to adapt, innovate and improve their own manufacturing processes. The result: The entire industry advanced, benefiting consumers and economies worldwide.

Fast forward to 2025, we find ourselves in a paradoxical situation. Instead of embracing competition, the U.S. is attempting to stifle it through sanctions and restrictions. Have we reached a point where geopolitical rivalry takes precedence over technological progress and market competition?

The rapid advancements in AI technology should serve as a wake-up call for the global community. AI has the potential to transform industries, economies and societies, but only if it is developed collaboratively rather than used as a tool for geopolitical maneuvering.

That is also why Chinese Foreign Minister Wang Yi emphasized the need for global AI governance, proposing the United Nations establish a global AI governance body and to ensure that AI development is inclusive and beneficial to all, leaving nobody behind.

The logic behind this proposal is clear: Technology should not be monopolized by any one nation. Instead, it should be shared, regulated and advanced collectively to prevent disparities in access and innovation.

The success of DeepSeek and RedNote should not be viewed as a threat to the U.S. technology sector or to national security; rather, it should serve as motivation to innovate. If the U.S. is concerned about losing its competitive edge, the solution is not to impose restrictions but to encourage American engineers, researchers and entrepreneurs to develop superior technology.

At the end of the day, technology evolves through competition, not isolation. If a company produces a better, cheaper and more efficient AI model, it is natural that consumers will choose it – regardless of its country of origin. The role of policymakers should be to create an environment where innovation flourishes, rather than artificially maintain dominance through protectionist measures.

The world stands at a critical juncture. Will we embrace competition and progress, or will we allow political considerations to hinder technological advancement? The answer will shape the future of AI, not just for one nation, but for humanity as a whole.

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