The Great AI Shift: Can Pakistan Forge A Path?

China’s emergence as a major player in the artificial intelligence (AI) sphere has sent shockwaves throughout the world. The country’s AI models are rapidly closing the gap with their Western counterparts, sparking concerns that China may have overtaken the US in the AI race.

At the forefront of this charge this week, was DeepSeek, a Chinese AI firm that has made waves with its latest AI model, R1. This model boasts performance on par with OpenAI’s models, despite utilizing less advanced computer chips and consuming lesser energy. Beijing’s ambitious plans to become the world leader in AI by 2030 are well underway, with the country investing nimbly in AI research and development.

DeepSeek’s success is a testament to China’s growing prowess in AI. Founded by Liang Wenfeng, a renowned quantitative investor, DeepSeek is backed by his hedge fund, High-Flyer, which finances the company’s AI research. In a rare interview, Liang issued a warning to OpenAI, stating, “In the face of disruptive technologies, moats created by closed source are temporary.” The company’s cost-effectiveness is also a key differentiator, with its Reasoner costing $0.55 per million input tokens and $2.19 per million output tokens, significantly less than OpenAI’s o1 model which has costs of $15 per million input tokens and $60 per million output tokens.

R1 has also surpassed o1’s performance on several benchmarks, including mathematical reasoning, word problems, and programming.

DeepSeek’s model family includes DeepSeek-R1-Zero, DeepSeek-R1, and six compact DeepSeek-R1-Distill models, ranging from 1.5 billion to 70 billion parameters. Janus-Pro, DeepSeek’s latest release, reportedly beats Stable Diffusion and older DALL-E models. Notably, DeepSeek was developed with an investment of under $6 million and it has also made its technology open source to make matters worse. This six million is a fraction of the billions invested by US tech giants, raising questions about the fundamentals of thess companies. The Chinese AI ecosystem is teeming with innovative models, each pushing the boundaries of what is possible in the field. Alibaba Cloud’s Qwen-2.5-1M, Baidu’s Ernie Bot, ByteDance’s Doubao 1.5 Pro, and Moonshot AI’s Kimi k1.5 are just a few examples of the cutting-edge AI solutions emerging from China one after the other.

The implications of China’s AI ascendancy are far-reaching. For developing countries, China’s success serves as a powerful inspiration, suggesting that hurdles to market access, in the AI space may not be as insurmountable as previously thought. After China’s announcements, neighboring countries have already gained the confidence to announce their own AI models, with India set to kick off its own large language model (LLM) similar to ChatGPT and DeepSeek within the next 10 months. The tectonic shift in the technology terrain has already had a profound impact on global markets, with DeepSeeks advent erasing more than $1 trillion in market cap as panic gripped Wall Street.

Investors are scrambling to reassess their portfolios, as the sudden emergence of Chinese artificial intelligence models have thrown the entire industry into turmoil. The big question remains, how did a two-year-old Chinese tech startup do, in six million dollars, what OpenAI took a decade to do, whilst incurring costs in billions of dollars? President Trump, after his first three days in office, with great fanfare, had literally just announced the “Stargate Project,” a $500 billion investment in AI infrastructure aimed at keeping “the future of technology” in the US. This sent NVIDIA stock surging. Until of course, the DeepSeek debacle happened so quickly and so publicly. The one trillion dollar stock market wipeout in a matter of 24 hours, shook the very foundations of the techno-feudalistic hegemony of the big seven on the financial beats. And then there’s another question that no one’s been asking. How AI, in both short and long terms, shall impact the environment?

The Stargate Project would have or is still set to become, a massive strain on the US energy grid and with wildfires crisscrossing America, a country that just walked out of the Paris Climate Pact, the so called Future of Tech, may just be a death knell for the planet’s ecology. However,  the Chinese models’ promise of more for less can become a more cost-effective solution and have a significantly lower energy footprint, making them better positioned to meet the growing demand for sustainable and environmentally friendly technologies as climate risks increase across the globe.

The barriers to entry in AI are in for a domino cascade, and the castles of competitive advantages that have allowed Big Tech to dominate the AI expanse, as their own personal fiefdoms, will have broken moats at best. With hardware costs shrinking, in turn, making AI more accessible to companies of all sizes, it feels like a game, set, rematch point. DeepSeek’s open-source approach means that anyone can try their models right now, a move that will hurt large stakeholders. Moreover, this has the potential to democratize innovation and enable a broader range of people to contribute to the design process in a meaningful and impactful way.

Why Sovereign Technology Assets Matter for Developing Countries

The emergence of China’s AI industry underpins the importance of technological self-reliance for developing countries. As the global digital domain continues to evolve, countries that fail to develop their own digital capabilities risk being left behind. These countries need sovereign technology assets to maintain control over their digital infrastructure, reduce dependence on foreign technology, and create new industries, jobs, and opportunities for economic growth. The advancement of AI and other such capabilities can have far-reaching implications for a country’s economic maturation. AI can be a key driver of productivity and competitiveness, enabling countries to leapfrog traditional growth pathways.

In the context of Pakistan, the passing of its Digital Nation Pakistan Act 2024 on January 28, 2025, marks a turning point in the country’s digital transformation journey. As Pakistan works on its National AI Policy draft, it is essential to consider the implications of Chinas AI boom and the opportunities it presents. By leveraging our friendly neighbours experience and expertise in the field, Pakistan and other emerging economies, can accelerate their national digital progress indicators and focus on building their own sovereign tech assets. This could enable Pakistan and countries of the global south to catch up with their Western or stronger economic counterparts and atleast work towards creating a more formidable position on the global cyber freeway.

Nations, especially those in this region, need to focus on making indigenous products so they may be able to interrupt the dominance of Western tech companies and create a more balanced digital ecosystem. This can help impede the rise of a tech-industrial complex, where the concentration of technological power and wealth lies in the hands of Big Tech and its offspring, OpenAI. They have demonstrated their ability to shape the world’s digital horizons to their advantage, and their control over critical digital infrastructure, such as data centers, cloud computing, and social media platforms, gives them an overarching influence over the flow of information and the world’s economy. This allows them to act as overlords, extracting wealth and mining data from individuals and nations without providing adequate compensation or protection in return.

It is essential for Pakistan to nurture and advance its own capabilities and reduce its dependence on external forces. This requires investing in IT infrastructure, pushing for digital literacy and awareness, and implementing policies that protect national sovereignty to render a more equitable and just digital environment for its citizenry.

The future of AI is likely to be shaped by the intersection of technological advancements, economic interests, and geopolitical challenges. As China and the US continue to push the boundaries of AI research and development, other countries will need to adapt and respond to this new reality. A balanced world is in everyone’s interest, as is being in sync in the new Intelligent Age. As artificial intelligence seeps slowly but surely into every corner, a better sense of preparedness may make countries like Pakistan take their rightful place in the global digital order.