Ramifications of China’s DeepSeek Moment, Part 3: What Both Parties Need to Accept and Do Next
Special Three-Part Series: Ramifications of China’s DeepSeek Moment. Read part I and part II.
Part I in this series explained how the recent release of a powerful open-source artificial intelligence (AI) model called “R1” by Chinese developer DeepSeek confirmed what many policymakers and scholars have long suspected: China is a formidable competitor in AI and advanced computation. This makes public policy decisions for these technologies more important than ever.
The United States has many advantages over China in the AI market, including world-leading private-sector computational capacity, a vibrant venture capital market, and a diverse digital ecosystem; however, China has its own advantages and is gaining ground rapidly in the race for global AI leadership.
Most notably, Chinese AI developers have gotten very good at cobbling together rapid-fire, low-cost digital technology solutions to remain highly competitive in global markets. Just days after the R1 release, another Chinese tech giant, Alibaba, announced the latest version of its Qwen large language model (LLM), claiming it surpassed DeepSeek’s model across various benchmarks and competed favorably with OpenAI and Meta’s latest LLMs.
President Donald J. Trump and other leaders argued that DeepSeek’s debut served as a “wake-up call” for America and that our nation’s technological lead and national security could no longer be taken for granted as Chinese AI capabilities advance. Part II of this series explained how cultural and speech-related values are also at stake in the global debate over AI governance, with China and other autocratic nations increasingly looking to control the most important information technology of modern times. Thus, the challenge is to American economic strength as well as broader pluralistic values.
Part III discusses some of the changes needed to ensure this will not happen as America looks to respond to the “DeepSeek moment.” The most obvious policy lesson is that the United States cannot stop China from pushing ahead on AI and advanced computation; instead, the nation must ensure its computational capabilities remain at the cutting edge of the technological frontier, running ever faster as the AI race with China intensifies.
Tech Attitudes Must Change in Both Parties
Both liberals and conservatives will need to adjust their approaches to digital technology in the wake of the DeepSeek moment to create a more positive innovation culture for AI. Digital technology companies and algorithmic systems have come under attack from both parties in recent years, but for different reasons. This must change to ensure America does not shoot itself in the foot by discouraging some of the nation’s leading innovators.
The left needs to move away from the fear-based rhetoric and technocratic regulatory approaches that dominated many of the Biden administration’s AI policy documents, including their historically long executive order (EO) and the “Blueprint for an AI Bill of Rights.” The latter document claimed that AI algorithmic systems are “unsafe, ineffective, or biased,” and “threaten the rights of the American public.” Such rhetoric and calls for extensive proscriptive AI regulations undermine the innovation policy culture needed to counter China.
The right must also be more flexible in two ways. First, the endless “Big Tech” bashing and threats of aggressive regulation need to stop. Vice President JD Vance recently said, “we believe fundamentally that big tech does have too much power,” having previously stated that tech companies should be broken up. However, just days before Vance made those latest remarks, Trump hosted a White House ceremony with leading large tech CEOs to announce an ambitious $500 billion “Stargate Project” AI venture to “provide a strategic capability to protect the national security of America and its allies.” This follows other major investment announcements by large tech companies as private U.S. venture capital continues to drive the AI revolution.
If the Trump administration and populist conservatives spend the next few years engaged in a war against large AI firms, it will just play to China’s advantage. Vance articulated a better approach for America during a major address before the Paris AI Action Summit last week, explaining that “excessive regulation of the AI sector could kill a transformative industry just as it’s taking off, and we will make every effort to encourage pro-growth AI policies.”
Additionally, conservatives must moderate their approach to high-skilled immigration—a currently contentious issue. The United States is involved in a talent war, and the nation has long benefited from attracting some of China’s top minds, who moved here to complete doctoral degrees and stayed to help develop cutting-edge technologies. Essentially, the United States was on the receiving end of a “brain drain” from China—and it was hugely advantageous to American innovation. Hard-nosed immigration policies could encourage talented students and entrepreneurs to stay home, which would deprive the United States of a major advantage in the race for AI “talent dominance.”
Luckily, policymakers on both sides of the aisle are increasingly realizing that the DeepSeek moment necessitates a more positive bipartisan approach if America is to remain the global leader in AI. In late 2024, the Bipartisan House Task Force on Artificial Intelligence released a 273-page report and concluded that “the United States must take active steps to safeguard our current leadership position” to “help our country remain the world’s undisputed leader in the responsible design, development, and deployment of AI.” An earlier report by the Bipartisan Senate AI Working Group, led by Sen. Chuck Schumer (D-N.Y), identified the need to “ensure the United States remains at the forefront of innovation in this technology.” In January, Trump signed a new EO on “Removing Barriers to American Leadership in Artificial Intelligence,” which aimed “to promote human flourishing, economic competitiveness, and national security.”
The DeepSeek moment serves as another reality check that these positive, pro-development statements and actions are needed to ensure America’s AI innovation culture can thrive.
Open-source Supremacy Is Crucial
While many policy steps are needed to ensure that result, one of the most important things policymakers must do in the wake of the DeepSeek moment is embrace open-source AI. While some critics want to limit open-source capabilities, the United States “must win the global open source AI race” to ensure American systems and values remain at the forefront of this global technology revolution.
China has made impressive strides with open-source systems and has been closing the gap with America. Containment strategies to slow Chinese AI advances can only get us so far because “over time, open artificial-intelligence systems are likely to outperform closed systems.” If the United States restricts its open-source capabilities, Chinese systems will fill that gap.
The Biden administration generally supported open-source AI, and Vance has been vocally supportive as well. Unfortunately, Sen. Josh Hawley (R-Mo.) recently introduced a bill that would ban the import or export of any AI technology to or from China. This sweeping prohibition, which includes stiff fines and jail time for violations, will stifle American AI progress and ultimately backfire because, as critics note, it will “erode the influence of U.S. firms abroad” and “promote a global reliance on Chinese technology.” More flexible approaches will be needed.
Export Controls Have Limits
The effectiveness of tech export controls became the topic of intense discussion across Washington following the DeepSeek moment. While that debate will continue in Congress and the Trump administration, there is growing consensus that export controls cannot hold back China completely. “Public policy can diminish Chinese computing power; it cannot weaken the minds of China’s finest researchers,” one analyst noted.
Even with some hardware-based export restrictions in place, Chinese AI developers have found ways to assemble enough powerful chips and technical know-how to produce impressive gains. And while China’s chip sector lags behind America’s, it may be that U.S. controls only serve to accelerate the development of China’s domestic chip-making capabilities.
Hardware-side controls will still play a role, at least in the short term, by keeping some computational hurdles in place for Chinese developers looking to match American investments. But the success of DeepSeek and other Chinese developers shows why American policymakers should focus more energy on removing domestic hurdles to expanding our own technological frontier. “For the United States to maintain its global AI leadership,” two AI scholars argue, “it must focus on competition and outcompeting its geopolitical rivals in the development, implementation, and diffusion of AI-based systems domestically and internationally instead of an expert-control-first approach.”
Before the Biden administration left Washington, it announced a significant expansion of AI export controls that could undermine U.S. leadership in advanced computing and will likely need to be revised by the Trump administration.
National Framework Needed to Protect Interstate Computational Commerce
Perhaps the greatest policy threat to America’s AI innovation culture today comes from the looming and rapidly growing patchwork of state and local AI regulations. One AI tracking service counts well over 600 AI bills already introduced in 2025—almost as many as all of last year. Most of those are state bills, and many are regulatory in character.
With the pace of AI development unfolding rapidly, the need for coherent governance becomes even more crucial. American innovators thrived in internet and digital technology markets in recent decades because a Republican Congress and the Clinton administration worked together to create a national marketplace for the free movement of digital speech and commerce. Today’s growing patchwork of AI regulations threatens that highly effective policy framework.
Unfortunately, neither the Trump EO nor any recent congressional proposal or congressional task force reports grapple with this problem. Congress must once again establish guidelines for what types of state AI regulation might impinge upon the interstate marketplace to ensure robust investment and competition can develop.
Conclusion
Many other important issues came into play following the DeepSeek wake-up call, including policies for energy and critical mineral access, cybersecurity and data privacy issues, worker training, and STEM education, and much more.
However, policy flexibility and forbearance should be lodestars of this revolution. America will not beat China by becoming China. Instead, as two former defense officials wrote in a 2024 op-ed, “our path forward instead lies in America’s capacity to innovate” and “it’s time to innovate as if the free world depended on it.” The key to that will be pro-innovation policies and investments that meet China’s challenge and clear the way for our nation’s best and brightest to help us win this technological race.