Chinese companies have become global leaders in manufacturing quality and innovation. Indeed, European telecommunications companies were concerned when early US President Donald Trump demanded the exclusion of Huawei components from 5G deployment programs. China’s two mobile payment giants, Alibaba’s Alipay and Tencent’s WeChat Pay, have more active users than PayPal and Apple Pay combined. This is the result of the spillover effect in developing countries: Chinese banks are bureaucratic and slow, and global credit card companies Visa and Mastercard have been banned. Alipay and WeChat Pay are now so ubiquitous in China that the use of cash is likely to be problematic in practice.[1]
China’s first “Sputnik moment” in 2016, when the world’s best Go player was defeated by AlphaGo, an artificial intelligence system developed by DeepMind, a London-based company owned by Google. This event can be compared to the American shock at the Soviet Union’s first successful satellite launch in 1957. At the time, President Eisenhower responded to this blow to America’s prestige by establishing the Advanced Research Projects Agency (DARPA) to support basic research in artificial intelligence and computer technologies.[2]
In recent years, global competition in the field of artificial intelligence has turned into a new technological Cold War between the great powers. One of the most prominent figures in this war has been China, with the launch of its DeepSeek artificial intelligence model. While China’s rapid rise in this field has caused concern in Western countries, the US government has invested heavily in countermeasures. The fact that the US aims to maintain its technological superiority over China through massive projects such as the “Stargate Project” shows that this race has turned into not only an economic but also a strategic competition. Technology investor Marc Andreessen compared DeepSeek’s success to the space race between the Soviet Union and the United States, calling it “the Sputnik moment of artificial intelligence.” as a “humanitarian organization”.[3]
DeepSeek, a Chinese artificial intelligence model, set a record for downloads in the Apple Store, surprising investors and causing some tech stocks to plummet. DeepSeek, whose latest version was released on January 20, has quickly become a serious competitor to ChatGPT.[4] Tesla CEO Elon Musk has expressed serious doubts about the claims of Chinese AI startup DeepSeek, leaving ChatGPT behind. While the “new player in the field of artificial intelligence” shook the tech giants in Silicon Valley, there was a significant depreciation in tech stocks following the rapid rise of DeepSeek’s artificial intelligence program. In particular, shares of Nvidia Corp. and ASML Holding NV declined as Wall Street indices have fallen in recent days, and Nvidia’s market capitalization fell by over $600 billion on Monday, January 27, 2025.[5]
Nvidia, the world’s most valuable company by market capitalization, fell to third place behind Apple and Microsoft as its market capitalization dropped from $3.5 trillion to $2.9 trillion.[6] However, since DeepSeek is a private company, investors cannot buy shares on any major stock exchange. This further complicates the company’s financial implications.
US-based companies, especially tech giants like Nvidia, have been significantly impacted by DeepSeek’s success. DeepSeek’s achievements have undermined the widespread belief that it is the only solution in the name of bigger budgets and high-end AI development tools. This has created uncertainty about the future of high-performance tools. DeepSeek has proven that cutting-edge AI models can be developed with limited computational resources. OpenAI, valued at $157 billion, has been questioned about the need for innovation and big spending without achieving significant returns.
US President Donald Trump, whom Elon Musk strongly supported in the elections, stated that American companies should focus on “competing to win” and considered this as a wake-up call against China.[7]
One of DeepSeek’s salient features is that it was built at a fraction of the cost of industry-leading models such as OpenAI; it was built using underdeveloped chips. Given DeepSeek’s significant restrictions, such as the ban on the export of advanced chips to China, Washington’s ability to limit Beijing’s efforts to gain technological supremacy has been questioned. Beijing, on the other hand, has redoubled its efforts in this area, with President Xi Jinping declaring artificial intelligence a top priority.[8]
Today, China’s potential for conflict is multi-layered. Trump’s second presidential term may see significant changes and new moves, especially in AI strategies towards China. During his first presidential term, the US effort to limit China’s advances in artificial intelligence through export restrictions on semiconductors stood out as a strategy to prevent China’s rise in the field of technology. Far from preventing China from developing innovative AI models such as DeepSeek, these restrictions have instead led China to develop more creative solutions and look for alternatives.[9] In Trump’s second term, the growing tensions in the AI race with China are likely to escalate further.
The Thucydides Trap describes a situation in which an emerging power is perceived as a threat by an incumbent power and the incumbent power adopts an aggressive strategy in the face of this threat. The Trump administration’s tough stance against China can be seen as an example of falling into this trap. Since China’s rapid progress in artificial intelligence poses a security threat and economic competition for the US, the US export restrictions on semiconductors and other critical technology components were originally designed as a countermeasure against this rising power. However, these restrictions have unexpectedly fueled Chinese ingenuity and led to the emergence of innovative models such as DeepSeek. China’s success could further reinforce the perception of a threat to US technological superiority, which could lead to tougher counter-moves in Trump’s new term.
In Trump’s second term, such a strategy is likely to be resorted to even more frequently, with the US aiming to put up more effective and direct barriers to prevent China from making further technological advances. In his first term, Trump sought to pressure China through economic and trade wars, while at the same time maintaining his own technological superiority. In his second term, he may adopt a more aggressive approach in strategic areas such as artificial intelligence. For example, it could impose more comprehensive sanctions and export restrictions on China in critical technology sectors such as artificial intelligence and advanced semiconductors. Such steps could also be seen as a reflection of the Thucydides Trap, an effort to protect American sovereignty against the rising power of China.
As a result, such strategic bans have proven to strengthen and further motivate China’s response. If China finds ways to circumvent the restrictions imposed by the US, this could create a new balance in the global AI race. If the Trump administration perceives such moves as a security threat and takes steps to stop China’s development, it could lead to further tensions in international relations and a potential Cold War. In this context, it is possible to say that the Thucydides Trap points to a strategic impasse stemming from the security concerns of both sides and the struggle for hegemony.
[1] “Thucydides And The Dragon: Artificial Intelligence And Sino-US Rivalry”, Forbes, https://www.forbes.com/sites/calumchace/2020/06/30/thucydides-and-the-dragon-artificial-intelligence-and-sino-us-rivalry/, (Date of Access: 28.01.2025).
[2] Ibid.
[3] “6 maddede Silikon Vadisi’ni sarsan DeepSeek”, Independent Türkçe, https://www.indyturk.com/node/752963/bi̇li̇m/6-maddede-silikon-vadisini-sarsan-deepseek, (Date of Access: 28.01.2025).
[4] “DeepSeek: The Chinese AI app that has the world talking”, BBC, https://www.bbc.com/news/articles/c5yv5976z9po, (Date of Access: 28.01.2025).
[5] “‘Lmao’, ‘Obviously’ To Emoji – How Elon Musk Mocked DeepSeek After It Beat ChatGPT”, NDTV, https://www.ndtvprofit.com/technology/how-elon-musk-mocked-chinas-deepseek-on-x-lmao-obviously-to-emoji-after-app-beat-chatgpt-read-all-about-it, (Date of Access: 28.01.2025).
[6] “DeepSeek Panic Live Updates: Nvidia Stock Rebounds 5% From Monday’s Historic Loss”, Forbes, https://www.forbes.com/sites/dereksaul/2025/01/28/deepseek-panic-live-updates-nvidia-stock-rebounds-5-from-mondays-historic-loss/, (Date of Access: 28.01.2025).
[7] “Trump: DeepSeek’s AI should be a ‘wakeup call’ to US industry”, Reuters, https://www.reuters.com/world/us/trump-deepseeks-ai-should-be-wakeup-call-us-industry-2025-01-27/, (Date of Access: 28.01.2025).
[8] “Remarks by China’s Permanent Representative to the UN Ambassador Fu Cong at the UN Security Council Briefing on Artificial Intelligence”, Ministry of Foreign Affairs The People’s Republic of China, https://www.mfa.gov.cn/eng/xw/zwbd/202412/t20241225_11517873.html, (Date of Access: 28.01.2025).
[9] “How the US may have unintentionally helped create an AI monster in China”, Business Insider, https://www.businessinsider.com/china-deepseek-chip-restrictions-exports-imports-2025-1, (Date of Access: 28.01.2025).
