A new AI powerhouse has emerged, potentially shaking up the global tech scene—or at least, that’s what the Chinese Communist Party wants the world to believe.
The market reacted dramatically. Stocks plummeted, and industry analysts speculated about a new technological era. Nvidia, a leading force in last year’s stock market boom, suffered the worst single-day market loss in history, shedding nearly $600 billion in value.
At the heart of the commotion is DeepSeek, a Chinese AI company owned by a hedge fund, which claims to have developed an AI system that rivals OpenAI’s ChatGPT at a fraction of the cost. While Chinese AI tech has been playing catch-up in recent years, DeepSeek’s reported progress suggests a major leap forward for the CCP’s AI ambitions.
Many of the claims about DeepSeek’s capabilities border on the extraordinary. Tech entrepreneur Marc Andreessen praised the company’s “amazing and impressive breakthroughs.” Some experts suggest that DeepSeek’s AI is vastly more efficient than its Western counterparts, requiring much less computing power. Even Nvidia, despite its stock losses, acknowledged DeepSeek as an “excellent AI advancement” in comments to CBS News.
DeepSeek reportedly developed its cutting-edge AI for just $6 million—a figure that raises eyebrows. By contrast, OpenAI has operated at a loss of over half a billion dollars, and Microsoft has poured billions into its development. The cost disparity is staggering. Then, early Wednesday, Chinese tech giant Alibaba announced it had built an AI model that surpasses DeepSeek’s.
Has China genuinely cracked the code for ultra-low-cost AI innovation, fueled by ingenuity and “hard work” under the enlightened guidance of the CCP? Or, as the old saying goes, is it too good to be true?
More likely, China is misleading the world about both the cost and origins of its AI advancements. Tech entrepreneur Palmer Luckey acknowledged that DeepSeek’s AI is “legitimately impressive” but dismissed the alleged $6 million development cost as “bogus,” warning that media outlets are blindly repeating “Chinese propaganda.”
This situation has all the markings of a strategic Chinese operation—one designed to disrupt American AI development, manipulate the stock market, and undermine Nvidia. History suggests that China’s apparent breakthrough in AI is the result of systematic infiltration of American tech firms and outright theft of intellectual property. On Tuesday, Bloomberg reported that Microsoft and OpenAI had launched an investigation into whether a group connected to DeepSeek had illicitly accessed sensitive OpenAI data.
But the culprits aren’t covert spies navigating laser-guarded vaults. They’re “highly skilled” foreign workers, brought into Silicon Valley through H-1B visas.
For decades, China has been the world’s foremost practitioner of industrial espionage. A 2017 U.S. Trade Representative report estimated that Chinese intellectual property theft costs the U.S. economy between $225 billion and $600 billion annually. The Center for Strategic and International Studies documented over 200 incidents of Chinese espionage in the U.S. since 2000—90% of those cases involved Chinese nationals, and over half aimed at stealing commercial technologies.
Chinese nationals receive the second-highest number of H-1B visas, after Indian applicants. They also make up the largest share of top-tier AI researchers in Silicon Valley, according to Business Insider.
The Trump administration recognized this growing threat and launched the “China Initiative” in 2018 to root out CCP spies in American universities and corporations. This program exposed several operatives, including Harvard professor Charles Lieber. However, the Biden administration canceled the initiative in 2022 under pressure from activists who claimed it encouraged racial profiling.
Even major tech firms like Tesla and Google are increasingly wary of Chinese employees, tightening security to guard against espionage. In March 2024, U.S. prosecutors charged Linwei Ding, a Chinese national and former Google software engineer, for stealing hundreds of confidential AI-related files and attempting to sell them to Chinese companies.
China’s tech theft strategy echoes Cold War-era operations by the Soviet bloc. Romania, for example, made industrial espionage an official government policy, using diplomatic missions as cover for theft. If a relatively small country like Romania could steal billions in Western technology, imagine what China—armed with vast resources and deep ties to the global elite—can achieve.
President Donald Trump recently announced a $500 billion AI infrastructure initiative in partnership with OpenAI, aiming to cement America’s dominance in AI. However, if Chinese agents continue to exfiltrate America’s most valuable AI research, such efforts may be in vain. The AI race with China is not just about technology—it’s a matter of national security.
To maintain America’s technological edge, Trump must reinstate and expand his “China Initiative” while aggressively curbing H-1B visas for Chinese nationals. Continuing to allow potential adversaries to occupy key positions in U.S. tech firms only strengthens the CCP’s hand. America does not need China’s so-called talent, and the risks they pose far outweigh any benefits.
