By MG Paul Vallely MG, US Army (Ret) and
The China Team
CCP Great External Propaganda Campaign on “AI Breakthrough”
On Monday, Jan 27, 2025, DeepSeek, an AI model developed by a mysterious, small Chinese company sent shockwaves through Wall Street. DeepSeek is claimed to perform at a level comparable to ChatGPT at magnitude lower cost with much fewer resources. This startling news deeply concerned Wall Street. As a result, NVIDIA’s stock dived 17%, which wiped out $600 billion in a single day – a record in Wall Street history. Other tech stocks, especially those related to AI also suffered significant losses.
Meanwhile, the CCP media prominently publicized Monday’s turmoil on Wall Street, hailing that DeepSeek executed a “sneak raid on Pearl Harbor,” and “Chinese AI elites successfully defeated Western competitors.” Today’s CCP propaganda news heavily focuses upon China’s dramatic technological advancements, boasting that the CCP has achieved its goal of “surpassing others on a curve,” and “the east has risen, the west has fallen”.
Timing of Raid and Jensen Huang’s Challenge Hsieh Chin-ho, a prominent journalist of financial news in Taiwan pointed out that DeepSeek’s sneak raid took place a week after Trump took office, one day before Chinese New Year’s Eve, and it was right after Trump invited three tech giants to make significant investments in AI. This raid is essentially an orchestrated counteract to Trump’s call for Making America Great Again.
Hsieh questioned, “This event also makes me think about why Jensen Huang missed the Trump’ inauguration. Logically, since Trump called for AI investments, Huang would be a key figure, yet he chose not to attend.”
Well, Huang must have his own dilemma. In the last few years, Huang has frequently visited mainland China, being reported happily dancing with locals at the Chinese New Year celebration. Huang has also frequently visited Taiwan, where he was born. He is known for being fond of street foods in Taipei. As the tension between China and America/Taiwan intensifies, how to keep a balance between the two sides is a new challenge for Huang.
DeepSeek’s 50,000 Nvidia H100 Processors
Additionally, how did DeepSeek acquire over 50,000 Nvidia H100 processors? The CEOof the American startup Scale AI immediately pointed out that DeepSeek has these processors as China imports chips from Singapore and Middle Eastern countries, renting computing power from those Middle Eastern countries. That’s why the Middle East buys so many chips.
DeepSeek is “Deep Diving”
According to Chinese Epoch Times, there is very little information available about DeepSeek. On late Monday, DeepSeek announced that the company restricted overseas user registrations due to “massive malicious attacks.” To add to its mystery, DeepSeek has refusedinterviews with domestic or foreign media. By Monday night, DeepSeek hasn’t responded to inquiries from the Epoch Times.
Misleading Low Costs
American capital firm Archerman Capital questioned the $5.5 million cost claim. DeepSeek’s self-claimed training cost is $5.5 million, which is one-tenth of Meta’s and one-twentieth of OpenAI’s, implying it’s ten to twenty times more advanced than the latter two. However, the expenses incurred by Meta and OpenAI are largely due to pioneering research, which often involves waste. In contrast, playing catch-up allows one to stand on the shoulders of others and, naturally, avoid much of that waste.
Stacy Rasgon, Managing Director and Senior Analyst at Bernstein Research for U.S. Semiconductors and Semiconductor Capital Equipment, also stated that DeepSeek’s training costs are highly misleading.
Lie by the CCP
Financial influencer Hu Caiwei in Taiwan worked as a journalist for years in Shanghai and Hangzhou, where DeepSeek is developed. Understanding the situration in China, Hu directly pointed out that DeepSeek’s low-cost statements are “impossible to verify,” as DeepSeek did not report the costs of its underlying language model. “The reported development cost must be a fake number”, wrote Hu.
In a post on her Facebook page “Emmy’s Drama Time,” Hu wrote: “We underestimate ourselves too much, and overestimate our enemy too much.”
Additionally, Hu stated: “DeepSeek’s parent company, High-flyer Quant Hedge Fund, is a company that places the utmost importance on military chip equipment. Chinese media have reported how High-flyer has been buying GPUs in large quantities, indicating they are the best equipped company in China. Such companies, following this logic of development, will only arm themselves with more powerful weapons. High-flyer claims they are developing AI with A800 and low-grade chips, which is an unverifiable statement.”
Hu further pointed out, “American society values honesty; lying or fraud will lead a company to severe legal consequences. Therefore, Americans assume that what Chinese companies say is credible, but Americans truly lack experience in dealing with Chinese companies.”
History of Making Frauds
As early as 20 years ago, the CCP claimed tthat a high-performance chip called “Hanxin” was developed, and Chinese state media praised it for several years, but at the end it turned out to be a fraud.
More recently, Huawei, the CCP’s chip-maker, claimed it broke through the U.S. blockade and produced a 7-nanometer chip, which is superior to TSMC’s chips. In response, TSMC stock dropped 10%, but it only lasted a week, then bounced back as the truth surfaced.
Taking Profits from Market Crash
Additionally, Hu posted on Facebook: “Last time when Huawei claimed it broke through the U.S. blockade and produced a 7-nanometer chip, TSMC stock dropped 10%, At that time, many people said that the reaction of U.S. stocks showed that Chinese AI had successfully attacked the U.S. and the news must be true. However, stock market investors are often the following the trends. Later, after explanation, no one doubted TSMC anymore (and TSMC stock bounded back), but such financial attacks do have effects, and many people profited from them.”
What will be the future?
Hu predicted the future and wrote: “However, if this event continues, it would be for the better. The U.S. government will impose stricter bans to thwart Chinese AI. American companies will believe they are facing a formidable enemy, making them nervous and taking the Chinese Communist Party seriously as a competitor. Once the U.S. and China genuinely clash, Taiwan won’t need to put effort convincing the U.S.; Americans will realize what a deceitful regime they are dealing with.”
References: “Deepseek开发成本必然谎报”胡采：美禁令拖慢它2.5年 应该要更严厉才对 ＊ 阿波罗新闻网 DeepSeek引華爾街震盪 低成本訓練遭質疑 | deepseek | 深
