Chinese AI is a risk for Europe. So is shunning it

ON JANUARY 20TH 2025 DeepSeek was an obscure hedge-fund-turned-tech-startup from Hangzhou. Within a week it had become the byword for a new wave of Chinese innovation, after launching an artificial-intelligence model as capable as Silicon Valley’s bleeding edge but much cheaper to build and run. Having slugged it out in China’s cut-throat domestic market over the past year, DeepSeek and its homespun rivals are looking abroad for profits. They will not find the largest ones in America, increasingly out of geopolitical bounds, or the poorer global south. That leaves Europe as the likely recipient of their attention.

To the old continent, new technology from China may seem like a curse. Chinese electric vehicles are already eating German and French carmakers’ Wurst and frites. Several EU countries have tried to restrict access to DeepSeek’s chatbot over fears that it might shunt data from European companies and citizens to China. No one wants to rely on a geopolitical adversary for what is fast becoming critical infrastructure. These worries are legitimate. But in the case of AI, China may, if embraced wisely, be a blessing for Europe.

There are three reasons why European firms should welcome this Chinese onslaught. First, Chinese models are nearly as good as the best that OpenAI, Anthropic and Google can offer—which for most users is good enough. Demis Hassabis, Google’s AI supremo, has said that Chinese AIs are only “a matter of months” behind American ones. Like DeepSeek, most cost nothing to access and relatively little to operate.

This cost advantage comes from their openness—the second reason why they ought to appeal to European firms. In contrast to proprietary black boxes peddled by leading American firms, open models can easily be fine-tuned and run on local infrastructure. Using them averts the risk of being locked in to any one provider. If OpenAI or Anthropic went belly-up, their customers would be in a bind. If DeepSeek were to fold, users could keep running its models’ “weights”, the parameters learned during training, on their own data and their own servers—which also allays data-theft fears. American firms like Meta also offer open models. But China is leading the way.

There is one last reason why welcoming Chinese AI is in Europeans’ interest: it offers insurance against lock-out, as well as lock-in. Before Donald Trump took the oath of office for the second time, also a year ago, it would have been absurd to worry about European access to American technology. As he recklessly exploits the transatlantic alliance over Greenland, an executive order limiting American AI firms’ business in Europe no longer seems unthinkable. Some European restrictions on American technology, including the computing clouds where AIs reside, are also plausible.

Although, in a fragmenting world, Europe’s best option may be to nurture its own AI industry, it is not about to become a model-building superpower. But it can still be a world leader in putting the technology to work. Already, 37% of EU businesses report using generative AI, on par with America. In manufacturing, European firms are ahead. Using open models, including from China, could further increase their lead.

Politicians in Europe appear to grasp this. With lots of interest and no voluble AI incumbents begging for protection, the early efforts to ban DeepSeek mostly fizzled out. In January the European Commission launched an effort to identify and remove barriers holding back open models. None of this will guarantee Europe’s techno-independence. Firms will still rely on American hardware, especially chips from Nvidia. Chinese software comes with all the old risks. But for Europe, the bigger one now is to spurn it. ■