The recent rise of Chinese artificial intelligence (AI) dark horse DeepSeek has sparked concerns about its potential impact on global economic power dynamics. As DeepSeek gains ground in the tech sector, some analysts believe it could weaken the influence of the US dollar and boost the internationalisation of China’s yuan currency.
According to Alex Holroyd-Jones, a multi-asset portfolio manager at a financial institution, DeepSeek’s efficiency gains could lead to lower investment requirements and a flattening of technology barriers worldwide. This, in turn, would benefit energy-poor regions and relative tech laggards, undermining one pillar of US exceptionalism – its technological leadership.
US dollar dominance has long been supported by the country’s strong tech sector, which attracts global investors. However, with DeepSeek challenging this advantage, Holroyd-Jones suggests that the other two pillars supporting the US dollar – expansionary government policy and higher interest rates – may also be affected. The implications of a weakened US dollar would be far-reaching, with significant consequences for global trade and investment.
Source: https://www.scmp.com/economy/china-economy/article/3298730/deepseek-eats-americas-ai-edge-us-dollar-dominance-risk