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Chinese AI firm DeepSeek sparks global tech stock selloff

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Tech stocks fell sharply on Monday as the advances of Chinese AI startup DeepSeek cast doubt on whether the US can maintain its lead in artificial intelligence by spending billions of dollars on chips.

DeepSeek has attracted increased investor interest since the company last week released its latest large language AI model, which performed comparably to those of US rivals OpenAI and Meta.

The startup claims to have made advances in training models using far fewer Nvidia chips than its US competitors, raising questions about Silicon Valley’s future purchases of AI-related hardware and possible return on investment.

Beats ChatGPT in the Apple Store

The Chinese company’s chatbot, a rival to OpenAI’s ChatGPT, climbed to the top of Apple’s App Store download list in the US over the weekend.

Shares of chipmaker Nvidia, one of the biggest winners of the artificial intelligence revolution, fell 9 percent in pre-market trading; Microsoft and Meta lost 4 percent. Stock futures pointed to a 3.6 percent drop in the technology-heavy Nasdaq, while the S&P 500 index was set to fall 2.2 percent.

Dutch chip equipment maker ASML fell 9.7 percent in early trading, leading a 4.8 percent drop in the Stoxx Europe 600 technology index.

“This is definitely DeepSeek,” a Tokyo-based fund manager said of Monday’s sell-off, adding that investors are quickly assessing whether hardware spending on artificial intelligence will be much lower than current estimates.

AI investment by large-cap US technology companies reached $224 billion last year, according to UBS, which expects it to reach a total of $280 billion this year. OpenAI and SoftBank announced last week that they plan to invest $500 billion in artificial intelligence infrastructure over the next four years.

Shares of Siemens Energy, which provides electrical equipment for artificial intelligence infrastructure, fell 19 percent. Schneider Electric lost 8.7 percent.

“This shows how vulnerable the artificial intelligence trade is still, like any trade based on the assumption of consensus and unquestionable leadership,” said Luca Paolini, chief strategist at Pictet Asset Management.

In Tokyo, Japanese chip companies Disco and Advantest, one of Nvidia’s partners, lost 1.8 percent and 8.6 percent respectively. China’s leading chipmaker SMIC fell 8.4 percent.

Furukawa Electric, which makes wire cables for data centers, had posted particularly sharp gains since November, but its shares fell more than 11.3 percent on Monday, the biggest drop on the Nikkei 225 benchmark.

‘The Sputnik moment of artificial intelligence’

DeepSeek, founded by hedge fund manager Liang Wenfeng, published a detailed paper last week explaining how to build a large language model that can automatically learn and improve itself.

“DeepSeek R1 is AI’s Sputnik moment,” venture capital investor Marc Andreessen wrote on X, drawing a comparison with the wake-up call to the US from the Soviet Union’s success in putting the first satellite into orbit.

“Even with these tariffs and investment restrictions on technology companies, the fact that China is not sitting idle seems to be emerging a little bit,” said Mitul Kotecha, Barclays’ Asia head of emerging markets macro and currency strategy.

‘There will be positive consequences’

Some analysts warned that the market reaction was overdone and that DeepSeek’s advances would ultimately be positive for AI chipmakers such as Nvidia.

Dylan Patel, principal analyst at chip consultancy SemiAnalysis, said that lowering the costs of training and running AI models will in the long run make it easier and cheaper for businesses and consumers to adopt AI applications.

“Improvements in training and inference efficiency are enabling AI to scale further and become mainstream,” Patel said. “This phenomenon has occurred for decades in the semiconductor industry, where Moore’s Law halves the cost every two years and the industry continues to grow and add more capabilities to chips.”

Although the broader CSI 300 index closed down 0.4 percent, some Chinese technology stocks rose today on the excitement generated by DeepSeek. In Hong Kong, Baidu closed up 4 percent and Alibaba closed up 3 percent.

“Technology has risen today and the overall mood in China is quite positive,” said Wei Li, Head of Multi-Asset Investments at BNP Paribas China.

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India intel push on China risks dangerous miscalculation, study says

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A Chinese scholar has warned that Indian intelligence agencies increasingly treating China’s routine activities as threats raises the risk that New Delhi could miscalculate and adopt “unilateral countermeasures” against Beijing.

According to Zhao Ruoxi, a researcher at the Macau University of Science and Technology, India stepped up its intelligence-gathering operations following the deterioration of relations with neighbouring China in recent years.

Zhao made the assessment in an article analysing Indian intelligence operations targeting China across the 2020–2026 period. The study was published in the 31 July issue of the Chinese-language Journal of Intelligence, issued by the Shaanxi Information Institute of Science and Technology, and reported by the South China Morning Post.

According to Zhao, China’s political and economic presence in South Asia, its emphasis on emerging technologies, and its naval activities in the Indian Ocean have been monitored more closely by India since a 2020 border clash.

In that clash in the Galwan Valley, 20 Indian and four Chinese soldiers were killed, dragging relations between the two countries to one of their lowest points in history.

Zhao noted that India has expanded its intelligence collection tools in recent years, drawing on space-based reconnaissance systems, drone surveillance, and cyber intelligence to establish a multi-agency network targeting China.

According to the article, India has also cooperated with the US and Middle Eastern nations to enhance its capacity to track Chinese naval operations in distant waters and exert informational pressure along Beijing’s maritime energy supply routes.

However, Zhao described India’s heavy reliance on foreign-sourced data as a “structural weakness”, arguing that it leaves New Delhi’s assessments of China vulnerable to the strategic agendas of third parties.

Zhao observed that while relations between Beijing and New Delhi began to improve in late 2024, India’s expanded intelligence activities directed at China have persisted.

The two countries took steps to mend ties after reaching an agreement in 2024 on resuming border patrols. Direct flights resumed after a five-year hiatus, Beijing once again permitted Indian pilgrims to visit the Tibet Autonomous Region, and India resumed issuing visas to Chinese tourists.

Last year, in another sign of easing tensions, Indian Prime Minister Narendra Modi visited China for the first time in seven years. In his meeting with Modi in Tianjin, Chinese President Xi Jinping said border issues should not define bilateral relations.

Following the reopening of the Lipulekh Pass in June, which Beijing viewed as a goodwill gesture, the two countries also resumed cross-border trade in August through the Himalayan passes of Nathu La and Shipki La.

In the article, Zhao stated that India is expected to ramp up technical surveillance in border areas, which will compel China to bolster its information security.

Zhao also warned that New Delhi could “systematically disrupt” Beijing’s diplomatic engagements with its South Asian neighbours, particularly its efforts to build regional trust and advance projects under the Belt and Road Initiative.

According to Zhao, the expansion of India’s intelligence operations against China heightens the risk of miscalculation, as routine Chinese activities are increasingly perceived as threats.

“As a result, the likelihood of triggering unilateral countermeasures increases,” Zhao assessed.

Zhao said China must make its strategic messaging more effective and reinforce communication with South Asian states and Indian Ocean littoral nations to counter this pressure.

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China and Arab states launch 5-year anti-desertification plan

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China and Arab nations have launched a five-year action plan to combat drought, desertification, and land degradation. According to information provided by China’s National Forestry and Grassland Administration (NFGA) to the Global Times on Sunday, the plan will extend bilateral cooperation beyond traditional anti-desertification efforts to encompass technological innovation in areas including grassland conservation, watershed management, and wetland protection.

The plan was inaugurated during a meeting convened on the sidelines of the 17th session of the Conference of the Parties (COP17) to the United Nations Convention to Combat Desertification, which is currently taking place in Ulaanbaatar, the capital of Mongolia.

According to an NFGA press release sent to the Global Times, China and Arab countries will, under the action plan, deepen practical cooperation over the next five years across key areas such as the restoration of desertified and degraded land, sand and dust storm monitoring and early warning systems, grassland management, biodiversity conservation, as well as wetland protection and restoration.

The two sides will also accelerate technological innovation and the practical application of research findings by establishing platforms to share technology, data, and research outcomes, conducting interdisciplinary studies, and developing technologies such as remote sensing and intelligent assessment of land degradation. The plan further envisages the establishment of demonstration bases to support the implementation of the UN Convention to Combat Desertification.

Under the plan, the sides also aim to strengthen China-Arab cooperation networks in combating desertification, enhance mechanisms for sharing policies, technologies, and research findings, and expand partnerships within the framework of China’s proposed Belt and Road Initiative. The participation of governments, research institutions, enterprises, social organisations, and local communities will be encouraged throughout the process.

Cooperation in capacity building will also be expanded through exchange programmes for young professionals, joint research, field demonstrations, and technical training sessions.

The meeting was jointly organised by China’s National Forestry and Grassland Administration and the General Secretariat of the Arab League, while the Chinese Academy of Forestry and the China-Arab International Research Centre for Drought, Desertification and Land Degradation undertook the event’s organisation.

Cui Lijuan, vice president of the Chinese Academy of Forestry, stated that several initiatives have already begun to materialise. For example, China and Egypt are exploring the possibility of conducting a comparative study examining the Yellow River and Nile River basins to share expertise in ecological conservation and integrated watershed management.

According to Cui, the initiative in question has secured the backing of the Chinese Academy of Forestry and attracted interest from international non-governmental organisations.

Future cooperation between China and Arab countries will also focus on desertification monitoring and early warning systems, ecological technologies, as well as exchange and training programmes for young specialists.

Cui noted that the two sides also aim to broaden participation by integrating businesses, social organisations, and international institutions into the cooperation framework, which is currently led primarily by state bodies.

According to Xinhua, the China-Arab International Research Centre for Drought, Desertification and Land Degradation was inaugurated in 2023 during an international forum on combating desertification. The establishment of the centre was viewed as a demonstration of China’s commitment to sharing the expertise gained from its anti-desertification efforts in the Kubuqi Desert.

According to the NFGA, the centre has steadily strengthened regular cooperation mechanisms between China and Arab countries over the past three years. While the two sides have jointly developed Earth observation systems and intelligent decision-support tools for land degradation, China has compiled 30 practical anti-desertification technologies across six categories suitable for application in Arab countries.

The centre has also established regular communication and exchange channels with several countries, including Saudi Arabia and Egypt. In addition, it has set up an initial China-Arab anti-desertification network and expert pool to support sustainable technical cooperation and professional training in Arab nations.

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China outpaces India in race for Russian crude oil supplies

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China has accelerated its crude oil purchases from Russia to replace oil shipments originating from the Middle East.

According to a Reuters report based on data from energy analytics firm Kpler, China is outpacing India in the Russian oil market.

India’s crude imports from Russia’s European ports fell by approximately 30% in August.

Beijing’s increased purchases could curb India’s exports of refined petroleum products and consequently trigger a diesel and gasoline shortage across Asia.

While China previously favoured ESPO blend crude shipped from Russia’s Asian ports, the share of its purchases from Russia’s European ports, consisting primarily of the Urals grade, has climbed to 31%.

Russian crude imports by India, the world’s third-largest oil importer, dropped to 1.87 million barrels per day in August. This volume remained well below the 2.79 million barrels per day recorded in July.

Under this scenario, which poses a risk to the Asian region, India stands as the region’s largest exporter of diesel and gasoline.

However, the country’s total crude imports in August were recorded at 4.17 million barrels per day. This figure marked the lowest level since the outbreak of conflict in the Middle East.

If the tightening raw material supply prevents Indian refineries from maintaining processing throughput, a severe deficit in refined products could emerge across the Asian market starting in September.

The Times of India previously reported that India’s Russian crude imports reached their highest share since 2022 in July.

During that period, Russia supplied more than half of India’s total crude imports of just over 5 million barrels per day, delivering 2.8 million barrels per day.

At the end of July, the Russian government extended its temporary export ban on gasoline, diesel, and other fuel types until 31 January 2027.

Under the restrictions that took effect on 1 August, direct exports of diesel, marine fuel, and gas oils by refiners will be exempted starting 1 September.

Bloomberg reported in June that Russian Urals crude was being sold in India at a $3.90 discount per barrel against international benchmarks after a hiatus of more than two months.

Urals crude traded at a discount again on 29 May for the first time since mid-March.

According to The Times of India, however, this discount on Russian Urals crude had almost entirely evaporated by early August.

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