China's AI scene a year after the DeepSeek shock shows renewed activity

DeepSeek's January 2025 release of a low-cost generative AI model is credited with energising investment and hiring across China's AI sector, and several startups and funds have reported larger funding rounds and deal flow since then.

DeepSeek's January 2025 launch of a low-cost generative AI model that performed at levels similar to ChatGPT is described as a turning point for China's AI sector. The breakthrough is reported to have lifted confidence among developers and investors and to have led to increased funding and hiring across the industry. At the same time, observers note constraints from US chip export controls and debate about market valuations and profitability. Key points: - DeepSeek's January 2025 model release is reported as having performance comparable to top Western chatbots and is credited with shifting perceptions of US dominance in the field. - Entrepreneur Wu Chenglin's DeepWisdom is reported to have raised 220 million yuan (about $30 million) in two funding rounds after earlier near-failures. - Beijing-based Jinqiu Capital's vice-president said the fund closed deals with more than 50 AI firms in the past year and that investor expectations for early valuations rose between 2024 and 2025. - Shares in two Chinese AI startups, Zhipu AI and MiniMax, are reported to have risen sharply after market debuts in Hong Kong. - US export controls limiting access to high-end Nvidia chips are noted as a constraint on some advanced computing resources in China. - By June 2025, more than half a billion Chinese internet users had reportedly used generative AI products, and applications to AI-related jobs rose by 39 percent in early 2025, according to the cited sources. Summary: The DeepSeek breakthrough is described as having driven fresh investment, faster hiring and wider adoption across China's domestic AI market, while also prompting concerns about market overheating and access to advanced chips. DeepSeek is reported to be preparing a new model release within weeks. Undetermined at this time.