Released on Jan. 20, DeepSeek-R1, an open-source AI model developed by the Chinese firm DeepSeek, has introduced a unique approach to AI development — one that prioritizes cost-effectiveness, transparency, and accessibility.

As artificial intelligence continues to emerge as a transformative driver of productivity and economic growth, the success of companies like DeepSeek underscores China’s accelerating adoption of AI technologies. DeepSeek’s achievements not only highlight the country’s growing prowess in AI innovation but also signal the unlocking of new growth opportunities for high-quality development across industries and society at large.

Over the past decade, China has made concerted efforts to build a robust foundation for AI development, leveraging the technology to upgrade traditional industries and foster emerging sectors. This focus has been underpinned by a series of forward-looking policies, including the Next Generation Artificial Intelligence Development Plan (2017), which set ambitious goals to establish AI as a key driver of economic transformation by 2025 and position China as the global hub for AI innovation by 2030. Complementing this vision, the AI Security Governance Framework was introduced in 2024 to address emerging risks while promoting responsible and sustainable AI development. These policies have helped to create a fertile environment for innovation, enabling China’s AI economy to achieve remarkable progress.

According to data from the Ministry of Industry and Information Technology, China is now home to over 4,400 AI companies, with the core AI industry reaching a total market size of 500 billion yuan (approximately $70 billion). The integration of AI into China’s primary, secondary and tertiary industries is continuously unlocking new growth potential. This trend is not only fostering the development of new quality productive forces but also paving the way for advanced productivity to break free from traditional economic growth models.

The increasing adoption of AI technology is revolutionizing China’s manufacturing sector, driving improvements in efficiency, sustainability and profitability. A Deloitte survey on AI adoption in manufacturing highlighted China’s strong performance in this area, projecting that the market for AI in the manufacturing sector will exceed $2 billion by 2025, representing an impressive average annual growth rate of over 40% since 2019.

In agriculture, the adoption of AI, combined with smart technologies like machine learning, drones and remote sensing for comprehensive farm management, is empowering farmers to transform traditional practices. This integration of AI is promoting more sustainable farming, reducing environmental impact and improving profitability.

Moreover, the integration of smart technologies across the agricultural value chain is steadily gaining momentum, generating new employment opportunities, especially in fields like AI, machine learning, software development and data science. This technological shift has made agriculture a more attractive career path for young Chinese professionals. Smart farming has created exciting new roles such as automation engineers, data analysts, agricultural technology consultants and precision agriculture specialists, contributing to agricultural development and rural revitalization.

Last October, China released a five-year action plan to accelerate the digital transformation of its entire agricultural industry. The plan focuses on leveraging advanced technologies like AI, the Internet of Things (IoT), and big data to improve efficiency, boost productivity and promote sustainable practices across the agricultural sector.

DeepSeek’s breakthrough demonstrates China’s enduring strength in innovation. While the country is making significant strides in AI adoption and application, several challenges remain. Addressing these challenges is key to unlocking further growth and realizing the full potential of the AI-driven economy. As participants in China’s AI economy collaborate to build a more integrated and cooperative ecosystem, the nation will unlock greater economic potential of AI, promoting technological innovation and infusing fresh vitality into economic growth.

Alexander Ayertey Odonkor is a global economist with a keen interest in the social, environmental, and economic landscapes of developed countries, emerging markets, and developing economies, particularly in the Asia-Pacific, Africa, Europe and North America.