January 31, 2025 • 7 mins
Chinese company DeepSeek is shedding light on the nations censorship and information control, and causing mass interest in doing so.
Asia Business Correspondent Peter Lewis talks to Ryan Bridge about what the AI company means for China, how it has been received in the country, and more.
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Speaker 1 (00:00):
Right now, though, let's go to Asia. Peter Lewis is
our correspondent in Hong Kong, heavy Chinese New Year.
Speaker 2 (00:06):
Peter, thank you very much and happy you have to
sneak to you. Ryan.
Speaker 1 (00:10):
So the big story, and we've been following it closely
over here, but I'm dying to know. This is Deep Seek,
the AI company. I'm dying to know how it's all
been received in China and well in Asia more generally,
but specifically in China.
Speaker 2 (00:25):
Well with with great interest, partly because this company has
really come out of nowhere. Most people have never heard
of it until this week. It's based in Tuangzhou, which
is on the eastern coast of China, and it's that's
the city that's hosts the headquarters of Ali Baba, so
Guangxio is known as being a sort of a center
(00:46):
of entrepreneurship. But this really did take people by surprise.
But what it has prompted is in a rush just
before Chinese New Year, other companies to also get out
similar models, which they say they have also been done
very very cheaply. Deep six said its model cost just
five five and a half million dollars. Well, when you
(01:07):
look at open Ai, it's worth about three hundred and
fifty billion. It's sort of really the minnows sort of
fighting back. But what it sort of shows that's interesting
here is that in some ways, all these restrictions that
have been put by the US on tech companies to
try and stemmy their growth haven't really worked, and they've
(01:30):
sort of had unintended consequences, one of which is this
in that companies find new ways to become innovative, to
get around them, to carry on developing their products. And
Chinese people in general are very innovative when the government
doesn't interfere. I mean, look at companies like Ali, Barbara
and ten cents. They grew into global giants before the
(01:53):
government trampled on them. China has a very good university system,
lots of good engineers, mathematicians, scientists. It really is a
highly educated country, lots of entrepreneurs. It's a big, big country,
so lots of people who really can sort of get
involved in things like this. And it reminds me a
(02:13):
little bit of Japan in the nineteen eighties, when America
had the same problem with Japan that it has now,
in that Japanese companies were becoming bigger and overtaking American companies.
They put all sorts of restrictions on them selling their products,
but it didn't stop them. Firms like Toyota still became
the largest Manu motor manufacturer in the world. Where we
(02:35):
think the same thing happened here. Chinese companies are learning
how to get around these restrictions. They're making their own
development innovatively and you know, and building up their companies. Now,
of course there are issues about sort of intellectual property
theft and the likes, but nevertheless, some of this is
(02:56):
being done off their own back and off their own initiatives.
Speaker 1 (03:00):
What about the Chinese National Intelligence law that apparently requires
any organization like the deep Seat for example, they have
to support and cooperate with the government should the government
request it. I mean, this is one of the things
that is in Australia, for example, they're saying the cybersecurity experits,
they're saying, don't download deep seak because there is this law.
(03:23):
There is this control is there, and do they use it?
Speaker 2 (03:27):
Oh? Yeah, absolutely. I mean this is one of the
reasons why TikTok's claim that it would never hand over
data to the Chinese government really doesn't hold much water
because if the Chinese government, they say that they would
refuse to do so. Well, if the Chinese government ordered
TikTok or deep seak or any other company to hand
(03:48):
over data on its users, they would have to do so.
And they ask many people who have seen the consequences
of firms that don't oblige by these don't accept these
data security law and don't follow them. The consequences are
pretty dire. People go to jail, the companies can get
broken up. And even the biggest, biggest companies like Ali Baba,
(04:09):
like ten Cents, they have suffered from this as well.
So no, that law is very much inforced. It is
enforced on a daily basis. And it's simply a beggars
belief that a company could say we somehow wouldn't follow
the instructions of the Chinese government. The Chinese Communist Party
as it is at the moment, intrudes in every single
(04:32):
area of business and of life.
Speaker 1 (04:34):
Yeah. Absolutely, and to be fear to deepstick, they do
put it in their t's and c's. So I guess
you can't say you didn't know. Yes, you've got some
data for well, you've got the more broadly some economic
data for US out of China this week, Yes.
Speaker 2 (04:48):
We had some pmis coming out. Once again, the economic
data in general is not really matching up the growth
target the GDP days. So last year up is GDP
grew five percent. That net Beijing's growth target. A lot
of people are very skeptical about that because the anecdotal
(05:09):
evidence on the ground doesn't suggest at all that China
is really meeting that businesses are struggling, they're having to
lay off people, there's been a big slump in consumption.
Retail sales are not really growing, and we saw that
in the PMI data that came out earlier in the
week where the manufacturing PMI showed its first contraction since September. Well,
(05:32):
that's not in support of an economy that's growing at
five percent. So, you know, the anecdotal evidence shows that
China really has some problems, and in particular, it's got
to get people out spending. And one of the reasons
why they don't go out and spend is because the
lack of a social security net in China. If you
(05:52):
lose your job, there's no support. You may find that
even if you have health insurance, as people did during
COVID doesn't cover you. So people are now saving more
for the future, saving for their healthcare, saving for their kids'
education because the state isn't providing anywhere near enough support,
and that of course effects consumption.
Speaker 1 (06:15):
Fascinating stuff. I can remember. I still live in Beijing, Peter,
and there were these economic investigators. I'd never heard of
them before, but they were like private investigators that would
go around because the obviously the party would say this
is the growth rate, and you would have big multinational
corporations who go, well, do we believe this? And they
would go around and they'd look at you know, steel plants,
(06:36):
they look at factories, they'd look at how much activity
was going on, how many trucks are coming in, how
many trucks are going how many cranes are in the sky,
how much building activity is going on, and try and
come up with a with an estimate for growth. So
I'm fascinating the country, isn't it.
Speaker 2 (06:52):
Yeah? And I mean you know that's that's how a
command economy works. And the difference between a command's economy
like China and like Australia or the US. A growth
GDP is an output you put in all the parameters
and outcomes. The GDP in China, it's an input. They say,
we want GDP of five percent, how are we going
(07:13):
to go and get it? And it's down to the
local governments to make sure they achieve it. And that's
where these inspectors come in to make sure they are
achieving it.
Speaker 1 (07:20):
Yeah, fascinating. Hey, thanks so much, Peter. Great to Heavy
on People, E's Asia Business correspondent. For more from Hither
Duplessy Alan Drive, listen live to news talks it'd be
from four pm weekdays, or follow the podcast on iHeartRadio.
Right now, though, let's go to Asia. Peter Lewis is
our correspondent in Hong Kong, heavy Chinese New Year.
Speaker 2 (00:06):
Peter, thank you very much and happy you have to
sneak to you. Ryan.
Speaker 1 (00:10):
So the big story, and we've been following it closely
over here, but I'm dying to know. This is Deep Seek,
the AI company. I'm dying to know how it's all
been received in China and well in Asia more generally,
but specifically in China.
Speaker 2 (00:25):
Well with with great interest, partly because this company has
really come out of nowhere. Most people have never heard
of it until this week. It's based in Tuangzhou, which
is on the eastern coast of China, and it's that's
the city that's hosts the headquarters of Ali Baba, so
Guangxio is known as being a sort of a center
(00:46):
of entrepreneurship. But this really did take people by surprise.
But what it has prompted is in a rush just
before Chinese New Year, other companies to also get out
similar models, which they say they have also been done
very very cheaply. Deep six said its model cost just
five five and a half million dollars. Well, when you
(01:07):
look at open Ai, it's worth about three hundred and
fifty billion. It's sort of really the minnows sort of
fighting back. But what it sort of shows that's interesting
here is that in some ways, all these restrictions that
have been put by the US on tech companies to
try and stemmy their growth haven't really worked, and they've
(01:30):
sort of had unintended consequences, one of which is this
in that companies find new ways to become innovative, to
get around them, to carry on developing their products. And
Chinese people in general are very innovative when the government
doesn't interfere. I mean, look at companies like Ali, Barbara
and ten cents. They grew into global giants before the
(01:53):
government trampled on them. China has a very good university system,
lots of good engineers, mathematicians, scientists. It really is a
highly educated country, lots of entrepreneurs. It's a big, big country,
so lots of people who really can sort of get
involved in things like this. And it reminds me a
(02:13):
little bit of Japan in the nineteen eighties, when America
had the same problem with Japan that it has now,
in that Japanese companies were becoming bigger and overtaking American companies.
They put all sorts of restrictions on them selling their products,
but it didn't stop them. Firms like Toyota still became
the largest Manu motor manufacturer in the world. Where we
(02:35):
think the same thing happened here. Chinese companies are learning
how to get around these restrictions. They're making their own
development innovatively and you know, and building up their companies. Now,
of course there are issues about sort of intellectual property
theft and the likes, but nevertheless, some of this is
(02:56):
being done off their own back and off their own initiatives.
Speaker 1 (03:00):
What about the Chinese National Intelligence law that apparently requires
any organization like the deep Seat for example, they have
to support and cooperate with the government should the government
request it. I mean, this is one of the things
that is in Australia, for example, they're saying the cybersecurity experits,
they're saying, don't download deep seak because there is this law.
(03:23):
There is this control is there, and do they use it?
Speaker 2 (03:27):
Oh? Yeah, absolutely. I mean this is one of the
reasons why TikTok's claim that it would never hand over
data to the Chinese government really doesn't hold much water
because if the Chinese government, they say that they would
refuse to do so. Well, if the Chinese government ordered
TikTok or deep seak or any other company to hand
(03:48):
over data on its users, they would have to do so.
And they ask many people who have seen the consequences
of firms that don't oblige by these don't accept these
data security law and don't follow them. The consequences are
pretty dire. People go to jail, the companies can get
broken up. And even the biggest, biggest companies like Ali Baba,
(04:09):
like ten Cents, they have suffered from this as well.
So no, that law is very much inforced. It is
enforced on a daily basis. And it's simply a beggars
belief that a company could say we somehow wouldn't follow
the instructions of the Chinese government. The Chinese Communist Party
as it is at the moment, intrudes in every single
(04:32):
area of business and of life.
Speaker 1 (04:34):
Yeah. Absolutely, and to be fear to deepstick, they do
put it in their t's and c's. So I guess
you can't say you didn't know. Yes, you've got some
data for well, you've got the more broadly some economic
data for US out of China this week, Yes.
Speaker 2 (04:48):
We had some pmis coming out. Once again, the economic
data in general is not really matching up the growth
target the GDP days. So last year up is GDP
grew five percent. That net Beijing's growth target. A lot
of people are very skeptical about that because the anecdotal
(05:09):
evidence on the ground doesn't suggest at all that China
is really meeting that businesses are struggling, they're having to
lay off people, there's been a big slump in consumption.
Retail sales are not really growing, and we saw that
in the PMI data that came out earlier in the
week where the manufacturing PMI showed its first contraction since September. Well,
(05:32):
that's not in support of an economy that's growing at
five percent. So, you know, the anecdotal evidence shows that
China really has some problems, and in particular, it's got
to get people out spending. And one of the reasons
why they don't go out and spend is because the
lack of a social security net in China. If you
(05:52):
lose your job, there's no support. You may find that
even if you have health insurance, as people did during
COVID doesn't cover you. So people are now saving more
for the future, saving for their healthcare, saving for their kids'
education because the state isn't providing anywhere near enough support,
and that of course effects consumption.
Speaker 1 (06:15):
Fascinating stuff. I can remember. I still live in Beijing, Peter,
and there were these economic investigators. I'd never heard of
them before, but they were like private investigators that would
go around because the obviously the party would say this
is the growth rate, and you would have big multinational
corporations who go, well, do we believe this? And they
would go around and they'd look at you know, steel plants,
(06:36):
they look at factories, they'd look at how much activity
was going on, how many trucks are coming in, how
many trucks are going how many cranes are in the sky,
how much building activity is going on, and try and
come up with a with an estimate for growth. So
I'm fascinating the country, isn't it.
Speaker 2 (06:52):
Yeah? And I mean you know that's that's how a
command economy works. And the difference between a command's economy
like China and like Australia or the US. A growth
GDP is an output you put in all the parameters
and outcomes. The GDP in China, it's an input. They say,
we want GDP of five percent, how are we going
(07:13):
to go and get it? And it's down to the
local governments to make sure they achieve it. And that's
where these inspectors come in to make sure they are
achieving it.
Speaker 1 (07:20):
Yeah, fascinating. Hey, thanks so much, Peter. Great to Heavy
on People, E's Asia Business correspondent. For more from Hither
Duplessy Alan Drive, listen live to news talks it'd be
from four pm weekdays, or follow the podcast on iHeartRadio.
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