When ChatGPT stormed the world of expert system (AI), an unavoidable concern followed: did it spell problem for China, America's biggest tech rival?

Two years on, a brand-new AI model from China has turned that question: can the US stop Chinese development?

For a while, Beijing seemed to fumble with its answer to ChatGPT, which is not readily available in China.

Unimpressed users mocked Ernie, the chatbot by search engine huge Baidu. Then came variations by tech firms Tencent and ByteDance, which were dismissed as followers of ChatGPT - but not as good.

Washington was confident that it was ahead and wished to keep it that way. So the Biden administration increase constraints banning the export of sophisticated chips and technology to China.

That's why DeepSeek's launch has amazed Silicon Valley and the world. The company states its powerful design is far less expensive than the billions US firms have invested in AI.

So how did a little-known company - whose creator is being hailed on Chinese social networks as an "AI hero" - pull this off?

DeepSeek: the Chinese AI app that has the world talking

Watch DeepSeek AI bot react to question about China

The challenge

When the US disallowed the world's leading chip-makers such as Nvidia from selling sophisticated tech to China, it was definitely a blow.

Those chips are vital for building effective AI designs that can carry out a series of human jobs, from addressing basic inquiries to resolving complex mathematics issues.

DeepSeek's founder Liang Wenfeng explained the chip ban as their "primary challenge" in interviews with local media.

Long before the ban, DeepSeek acquired a "substantial stockpile" of Nvidia A100 chips - quotes vary from 10,000 to 50,000 - according to the MIT Technology Review.

Leading AI models in the West use an approximated 16,000 specialised chips. But DeepSeek says it trained its AI design utilizing 2,000 such chips, and countless lower-grade chips - which is what makes its product cheaper.

Some, including US tech billionaire Elon Musk, have questioned this claim, arguing the company can not expose the number of sophisticated chips it really used provided the restrictions.

But specialists state Washington's restriction brought both difficulties and opportunities to the Chinese AI industry.

It has actually "forced Chinese business like DeepSeek to innovate" so they can do more with less, states Marina Zhang, an associate teacher at the University of Technology Sydney.

DeepSeek's creator Liang Wenfung (R) at a current federal government conference

" While these constraints present difficulties, they have actually likewise stimulated creativity and strength, aligning with China's broader policy goals of achieving technological self-reliance."

The world's second-largest economy has invested greatly in huge tech - from the batteries that power electrical cars and solar panels, to AI.

Turning China into a tech superpower has long been President Xi Jinping's ambition, so Washington's limitations were likewise a challenge that Beijing handled.

The release of DeepSeek's brand-new design on 20 January, when Donald Trump was sworn in as US president, was deliberate, according to Gregory C Allen, an AI specialist at the Center for Strategic and International Studies.

" The timing and the way it's being messaged - that's precisely what the Chinese federal government desires everyone to believe - that export controls do not work and that America is not the international leader in AI," states Mr Allen, former director of technique and policy at the US Department of Defense Joint Artificial Intelligence Center.

In the last few years the Chinese government has actually nurtured AI skill, using scholarships and research grants, and motivating collaborations in between universities and market.

The National Engineering Laboratory for Deep Learning and other state-backed initiatives have actually assisted train countless AI professionals, according to Ms Zhang.

And China had lots of brilliant engineers to recruit.

Is China's AI tool DeepSeek as good as it appears?

BBC's AI reporter explains why DeepSeek has actually triggered shockwaves

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The talent

Take DeepSeek's team for example - Chinese media says it comprises less than 140 individuals, the majority of whom are what the web has actually proudly declared as "home-grown skill" from elite Chinese universities.

Western observers missed out on the development of "a brand-new generation of business owners who prioritise fundamental research and long-term technological advancement over quick revenues", Ms Zhang says.

China's leading universities are creating a "quickly growing AI talent pool" where even managers are frequently under the age of 35.

" Having matured during China's rapid technological climb, they are deeply encouraged by a drive for self-reliance in innovation," she includes.

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Watch: DeepSeek AI bot reacts to BBC question about China

Deepseek's creator Liang Wenfeng is an example of this - the 40-year-old studied AI at the distinguished Zhejiang University. In a short article on the tech outlet 36Kr, individuals acquainted with him state he is "more like a geek rather than a manager".

And Chinese media describe him as a "technical idealist" - he insists on keeping DeepSeek as an open-source platform. In reality experts likewise believe a flourishing open-source culture has enabled young start-ups to pool resources and advance quicker.

Unlike bigger Chinese tech firms, DeepSeek prioritised research, which has actually enabled more exploring, according to professionals and people who worked at the business.

" The Top 50 skills in this field might not remain in China, however we can develop people like that here," Mr Liang said in an interview with 36Kr.

But specialists wonder how much even more DeepSeek can go. Ms Zhang says that "new US constraints may restrict access to American user information, potentially affecting how Chinese designs like DeepSeek can go global".

And others state the US still has a substantial benefit, such as, in Mr Allen's words, "their enormous quantity of calculating resources" - and it's likewise uncertain how DeepSeek will continue using advanced chips to keep enhancing the model.

But for now, DeepSeek is enjoying its moment in the sun, considered that many people in China had never heard of it up until this weekend.

The brand-new AI heroes

His sudden fame has seen Mr Liang end up being a sensation on China's social media, where he is being praised as one of the "3 AI heroes" from southern Guangdong province, which surrounds Hong Kong.

The other 2 are Zhilin Yang, a leading specialist at Tsinghua University, and Kaiming He, who teaches at MIT in the US.

DeepSeek has thrilled the Chinese web ahead of Lunar New Year, the country's most significant holiday. It's good news for a beleaguered economy and a tech industry that is bracing for further tariffs and the possible sale of TikTok's US business.

" DeepSeek reveals us that only if you have the real offer will you stand the test of time," a top-liked Weibo remark reads.

" This is the very best new year present. Wish our motherland thriving and strong," another reads.

A "blend of shock and enjoyment, particularly within the open-source neighborhood," is how Wei Sun, principal AI analyst at Counterpoint Research, explained the reaction in China.

DeepSeek's success has actually been cheered in China throughout its greatest holiday

Fiona Zhou, a tech employee in the southern city of Shenzhen, states her social media feed "was all of a sudden flooded with DeepSeek-related posts yesterday".

" People call it 'the splendor of made-in-China', and state it shocked Silicon Valley, so I downloaded it to see how good it is."

She asked it for "4 pillars of [her] destiny", or ba-zi - like a customised horoscope that is based upon the date and time of birth.

But to her disappointment, DeepSeek was incorrect. While she was offered an extensive explanation about its "thinking process", it was not the "4 pillars" from her real ba-zi.