China’s AI revolution is getting a plot twist. The country has long been a factory for STEM graduates, but when it comes to producing true innovation, its track record has been mixed, the New York Times reports. That might be changing, due to DeepSeek — the AI startup that’s forcing the world to reconsider China’s tech ecosystem, and whether the country’s education system is finally outpacing the US.

Global figures are paying attention. Telegram founder Pavel Durov recently praised China’s intense academic competition, warning that if the US doesn’t rethink its education system, it could lose its tech dominance. But while China’s talent pool is deeper than ever, the reality is a bit more complicated.

Education and innovation are a balancing act. China’s higher education boom has been nothing short of staggering. In the past two decades, the number of university graduates has skyrocketed more than 14-fold. Academic institutions like Tsinghua and Peking University now rank among the world’s best and AI education is booming — with over 2.3k new undergraduate AI courses launched since 2018.

Despite this surge in talent, many of China’s best AI minds still look abroad for work. Nearly half of the world’s top AI researchers come from Chinese universities, but most still work in the US, according to research group MacroPolo. That trend may shift as Washington tightens visa restrictions for Chinese students in sensitive fields, pushing more talent to stay put.

Creativity remains a challenge, however. One of the biggest critiques of China’s education system is that it’s too focused on exams and not enough on creativity. This has led, among other things, to a stereotype that Chinese engineers excel at refining existing tech, but struggle to break new ground.

DeepSeek offers an alternative model: DeepSeek’s founder, Liang Wenfeng, has acknowledged that top tier talent often goes unnoticed because of the system’s supposed rigidity. One way DeepSeek has broken the mold is by hiring non-STEM and humanities students, which Liang has argued creates a diverse environment that encourages thinking outside the box.

What’s the government role in AI’s future? Beijing has thrown its weight behind the country’s AI research, building stronger bridges between academia and industry. But this state support is a doubled-edged sword. While funding has fueled major breakthroughs, government intervention has held back some of the country’s biggest tech giants — like Alibaba, which found itself caught in a regulatory storm four short years ago. DeepSeek has so far managed to fly under the radar, partially through its presentation of itself as an intellectual project rather than a profit-driven challenger for power.

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