The question misses the way the “canvas” has shifted.

The DeepSeek artificial intelligence product is part of this shift in the ‘canvas’ where cheap AI will power the digitalisation of the Chinese economy.

These changes impact the way NT business sells its products into China, be it a bottle of aromatic oil or the way we entice tourists to visit the NT. It impacts the way the NT attracts business investment into the Territory because Chinese business will bring a higher expectation of digital competence and availability.

But before these issues are even considered we have to move past the idea that the Chinese economy is “on the canvas” and, as implied by the media headline, “out for the count.”

The China bears believe China will collapse as it falls inexorably into the middle income trap.

Escape from the middle income trap is enabled by an improvement in productivity. It could be argued that the technology of the desktop computer drove the last great spurt of productivity in Western economies.

For China, the expansion of productivity rests on the digital economy and that is powered
by AI. This is not the expensive, power hungry multi-hectare data centre-based AI, but the cheap, affordable AI seen in DeepSeek.

Access to cheap AI changes the economics of business because it makes many processes cheaper and more efficient.

For China manufacturers, it means that already competitively priced goods can become even more competitively priced as AI is used to improve manufacturing processes. NT businesses that outsource production to China should be able to benefit from these reduced production costs. NT businesses that import China goods may also find reduced costs, which should, in turn, flow on to reduced costs for NT consumers.

This cost reduction has a downside in that Chinese goods will become more price competitive with Australian substitutes, forcing efficiencies on Australian production processes. The fight for consumer preferences may need to rely more on product quality rather than product price.

The digital shift will change the management of logistics and supply chains, potentially bringing additional costs in updating digital systems.

On a broader scale, the development of DeepSeek suggests that business in China is no longer business as usual. DeepSeek is part of the shift in the focus of the Chinese economy. It raises many important issues, but perhaps the most important of all is how this advance in AI will power the digitalisation of the Chinese economy.

The media commentary around DeepSeek does not recognise the role that this most efficient technology will play in increasing productivity. The DeepSeek commentary doesn’t understand the economic and
social impact of these features.

DeepSeek is deeply discomforting to those Western commentators