DeepSeek: The New Sputnik Moment

At a time when the West, and Corporate America, are reeling from competition from Communist China, the news that Beijing is further along than expected on Artificial Intelligence is a jolt. Some invoke the specter of Sputnik, as the news raises “questions about the future of America’s AI dominance,” per the BBC. It suggests the scale of the challenge ahead as America and its allies aim to compete with China on defense while keeping close trade ties.Those two aims look increasingly incompatible, reflecting a dilemma that was never as applicable as in the case of the Soviet Union. Trade links between Russia and America at the outset of the Cold War were negligible, as George Kennan pointed out in 1947 when he heralded what would be the Containment strategy. America had “no investments to guard, no actual trade to lose, virtually no citizens to protect, few cultural contacts to preserve.” So in 1957 it was a no-brainer to mobilize America’s education system to meet the threat posed by a Soviet satellite beating the West into orbit. General Motors was not clamoring to sell Buicks in the suburbs of Leningrad, nor did IBM harbor hopes of hawking mainframes at Moscow. Efforts now to “decouple” China and America are hampered in part by the fact that Western supply networks have grown dependent on Chinese-made goods.Yale economist Stephen Roach goes so far as to describe the bond between America and China as “codependency.” If so, it is one in which Beijing’s mercantilist policies — measured, say, by its record-breaking $1 trillion trade surplus in 2024 — are tilting the relationship toward the Middle Kingdom’s side of the ledger. This is not what architects of deeper trade ties with China had in mind when Beijing was given Most-Favored-Nation status in 2000. President Clinton crowed then that it would “advance our own economic interests.” He added: “Economically, this agreement is the equivalent of a one-way street,” explaining that “it requires China to open its markets” to America “in unprecedented new ways.” Plus, too, Mr. Clinton promised, “We’ll be able to export products without exporting jobs. Meanwhile, we’ll get valuable new safeguards against any surges of imports from China.”Buried in the fine print, though, when American and Western nations raced to do business in China, were the requirements that forced foreign companies to turn over their trade secrets. Foreign auto makers, like General Motors, were let “into the country only as part of a publicly stated, long-term policy to gain technology and build its own globally competitive industry,” the New York Times recently reported. Now, GM has been overtaken by Chinese rivals.Beijing’s requirements that foreign companies “partner” with local companies led to the vast transfer to the communist regime of Western technology and intellectual property. In 2018, the Times reported that “foreign companies have long complained that they are simply training future rivals.” Meanwhile, far from being a boon for working Americans, opening trade ties with China led to the loss of some 6 million manufacturing jobs — the “China Shock.”That’s the context in which to view the news of China’s apparent strides in AI. The Chinese firm DeepSeek astonished the tech world — and rattled markets — by presenting what Silicon Valley venture capitalist Marc Andreesen calls “one of the most amazing and impressive breakthroughs I’ve ever seen.” What’s particularly spooked American tech firms is that China is making these gains on the cheap, at a fraction of the cost envisioned here in the States.While it’s too soon to know how this will impact the race to master AI, the news is sobering in light of expectations that the new technology could play a decisive role in future phases of economic development, not to mention the defense and security applications that are of importance to America’s global standing. If DeepSeek is shaping up as a new Sputnik moment, it speaks to the urgency of reappraising America’s trade relationship with China.

DeepSeek: The New Sputnik Moment

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