DeepSeek Boom Sparks Revival of China’s AI Sector

BEIJING – Before Chinese AI startup DeepSeek disrupted the global technology landscape, entrepreneur Wu Chenglin’s own company had come close to shutting down multiple times. Today, following a surge of confidence in China’s artificial intelligence sector, Wu’s firm DeepWisdom has raised nearly $30 million in new funding within a year.

The turning point came in January 2025, when DeepSeek unveiled a low-cost generative AI model capable of matching the performance of leading US chatbots such as ChatGPT. The breakthrough challenged long-held assumptions about American dominance in artificial intelligence and energised China’s tech ecosystem.

Wu said DeepSeek’s success restored confidence among developers and investors who had previously doubted China’s ability to compete at the highest level. Riding the momentum, DeepWisdom secured 220 million yuan through two funding rounds as investment poured into the sector.

Venture capital firms have also felt the impact. Shi Yaqiong, vice president of Beijing-based Jinqiu Capital, said her firm closed deals with more than 50 AI startups over the past year, noting a sharp rise in valuations and investor competition following DeepSeek’s emergence.

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Market enthusiasm has been further reflected in the strong Hong Kong debuts of Chinese AI firms Zhipu AI and MiniMax, while global AI optimism continues to drive tech stocks higher. However, analysts warn that soaring investments have raised concerns about a potential market bubble and long-term profitability.

Despite US restrictions on advanced Nvidia chips, Chinese developers remain optimistic. Many argue that export controls are pushing China toward open-source, low-cost AI models that could prove more accessible and widely adopted. Industry observers also point to China’s vast pool of engineers as a key advantage.

Data from recruitment platform Zhilian Zhaopin shows applications for AI-related jobs jumped 39 percent in the first three quarters of 2025, reflecting growing interest in the field. Meanwhile, by mid-2025, more than 500 million Chinese internet users had tried generative AI tools, underscoring the size of the domestic market.

DeepSeek, which began as a side project of a Hangzhou-based hedge fund, now holds an estimated four percent of the global chatbot market. Its open-source approach has accelerated adoption in cost-sensitive markets, although privacy and security concerns continue to limit uptake in Western countries.