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Comment by SubiculumCode | Hacker News Reader

Yeah, the discounted deepseek inference is subsidized by the CCP for a reason, and it's one that might well come back to bite.

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There is no evidence it is subsidized. Actually, there is evidence that (1) electricity is cheap in China & (2) deepseek is a very efficient model.

I think there is sufficient evidence to think its very likely. For example: https://www.americansecurityproject.org/wp-content/uploads/2...

> deepseek inference is subsidized by the CCP

What is that claim based on?

Check the pricing on OpenRouter. V4 Pro is twice as expensive from the next cheapest provider and 3.5x as expensive for fp8 (as opposed to fp4) from a US provider.

But I assume they're just harvesting training data since there's par for the course. There are also a handful of US labs offering free access for that exact reason.

Besides common sense given the clear geopolitical context, sources like:

[1] https://chinaselectcommittee.house.gov/sites/evo-subsites/se... [2] https://ai.americansecurityproject.org/news/ai-imperative-20...

and more.

Of course, you can choose to ignore America-biased sources, but since it aligns with the obvious.

There is no evidence in those sources that DeepSeek is "subsidized" by the CCP in the way people imply (e.g. in an actively malicious*, market-distorting way that undercuts the competition, early Uber-style). They do receive tax breaks for their R&D research, a very common scheme in Europe (and which also used to be the case in the US, I believe). They also have public-private partnerships, e.g. the state is one of their clients. Also common in every free market economy. (SpaceX anyone?)

*This does not invalidate other concerns (censorship, privacy) but the way people phrase it makes it look like DeepSeek and co. are 'cheating' somehow with their business model by 'distorting' inference cost to make it way artificially lower than its 'natural price' (either notion being hopelessly naive)

"According to a report from Securities Times (a Chinese state-owned newspaper), Zhejiang Oriental, a listed company under the Zhejiang Provincial SASAC, participated in the angel round of financing of DeepSeek through its Hangzhou Oriental Jiafu Venture Capital Fund."[1]

"The Zhejiang Provincial State-owned Assets Supervision and Administration Commission (SASAC) is the provincial government agency in Zhejiang, China, responsible for managing, regulating, and overseeing the state-owned assets and enterprises owned by the provincial government." [2]

What does this imply? A state-owned company in China invested a ton of money into DeepSeek. aka State subsidization.

[1] https://www.americansecurityproject.org/wp-content/uploads/2... [2] https://www.fitchratings.com/research/corporate-finance/zhej...

Again, that's besides the point. So the state is an investor in DS, and? Many companies in Western capitalist economies receive initial state funding, especially startup grants. The real point to make is: does the state purposely fund the structural expenses of all those companies at a loss in an effort to undercut the competition and without which they would all go bankrupt and the cost of inference would be naturally much higher and couldn't be possibly optimized? I have yet to see evidence of that, especially given the continuous and prolific R&D from Chinese labs (or the panic at Meta when DS-r1 came out) that does show optimization gains are in fact possible.

An angel investor is an investor who provides early-stage capital to startups and entrepreneurs in exchange for ownership equity. That is not a grant or initial state funding. That is ownership. There are very few examples, especially prior to Trump, of government ownership/stakes of public companies.

But I will concede this: Due to the opaque nature of the Chinese economy to public scrutiny, we might never know.

I am sure, however that substantial use of Chinese inference (not their models per se, but on their servers) is, in aggregate, presents a substantial national security risk for the West. Heck, AI all by itself, without even considering other nations, is a national security threat of the near future, where national security is broadly construed as any threat against its people's welfare, no matter the actor.

>That is not a grant or initial state funding. That is ownership. There are very few examples, especially prior to Trump, of government ownership/stakes of public companies.

Maybe not in the US (although Musk getting state subsidies comes to mind), but very common in Europe. Quite a few founder friends of mine have gotten started with state funding (through various R&D promoting agencies). Angel investing is not the only startup funding structure out there

They invested in a labelling company called "Deep Search" that news confused with "Deep Seek". It was corrected like a week later, of course very not agenda driven americansecuirtyproject never followed up / did retraction.

Have a source on that?

Too annoying to track down the original posts, but here's mirror:

>Gelonghui, February 11th | Zhejiang Orient Financial Holdings Group (600120.SH) announced the following explanation regarding the recently market-focused "DeepSeek Concept": DeepSeek is a large model under Hangzhou DeepSeek AI Basic Technology Research Co., Ltd. (hereinafter referred to as "DeepSeek"). In response to matters of concern in the Capital Markets, the company verified that as of the date of this announcement, the names of companies invested by the fund Sector managed by the company, such as Peking Deep Search Technology Co., Ltd. and Peking Jiuzhang Yunjike Technology Co., Ltd., are quite similar to those of DeepSeek and its affiliated enterprises, but there is no equity investment relationship. The company and the relevant private equity funds managed by the fund Sector have not directly or indirectly invested in DeepSeek.

ttps://news.futunn.com/en/post/53041547/zhejiang-orient-financial-holdings-group-600120-sh-and-its-managed?level=1&data_ticket=1780940972364876

Well, many people don't have very warm feelings for American LLM providers so they don't care. (Which matters because, at least anecdotally, they do care when buying a new car.)

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