Opportunities, Challenges, and Regulatory Responses to China’s AI Computing Power Development under DeepSeek’s Changing Landscape

Abstract DeepSeek marks a significant advancement in artificial intelligence (AI), ushering in a new phase of development that is reshaping the global AI landscape. AI progress has relied on the assumption that increasing computing power drives better outcomes. Yet, this focus has yielded diminishing returns, amplifying problems like market monopolies and unaddressed risks. By making its model freely available through open-sourcing, DeepSeek revitalizes the market and uses techniques like model distillation to ensure broader access to computing resources. For China, DeepSeek offers a strategic chance to close the gap with global AI leaders. However, efficiency gains in DeepSeek’s design unexpectedly increase computing demand – a phenomenon known as the Jevons paradox. Meanwhile, China grapples with limited computing resources, heightened security concerns, and stricter U.S. chip export restrictions. These difficulties underscore a deeper tension between current infrastructure and fast-evolving technology. Given computing power’s dual role, alongside China’s industrial needs and global competitive dynamics, regulation should prioritize enabling growth. This facilitative regulatory framework demands dynamic demarcation between public and private spheres in computing infrastructure governance. It also calls for advancing standardization, securing the entire supply chain, and adopting adaptable governance models. Globally, computing power governance is shifting toward “competitive cooperation,” where nations collaborate amid rivalry. China can lead by pushing for international standards, contributing its expertise to a secure, stable, and mutually beneficial global computing ecosystem.