China Advances To Second Place In Global Soft Power Ranking – OpEd

China has overtaken the UK to secure 2nd place globally, advancing one position from the previous year … in the Global Soft Power Index 2025.

The latest report of the Global Soft Power Index for 2025 by influential brand valuation consultancy, Brand Finance, highlights the remarkable progress of China in its index ranking the extent of power and influence in world politics and international relations wielded by countries of the world. It now sits at second place behind the US which, although ranking first, has seen its soft power standing undermined by global concerns of its political stability, reputation and governance.

The Global Soft Power Index report is based primarily on key indicators in economics and business. It also measures attributes related to culture and heritage, media and  communication, education and science and sustainability. These together are increasingly seen as the other more influential and effective side of the power coin as compared with the flip side of hard power associated with military power and intervention, coercive diplomacy and economic sanction. 

The report notes that China retains first place globally for ‘ease to do business in and with’ and ‘future growth potential’ attributes for the last four years consecutively. This is a picture quite different to the one of ‘China collapsing’ and ‘China in economic crisis’ regularly featured in western mainstream media and reproduced by supporting Asian media.

What is also notable is that China has soared to 7th place in the ranking of ‘culture and heritage’ and ‘media and communication’ attributes. This trend is strengthening with the further opening up of the country to foreign visitors and the global impact of the movie, Ne Zhe2 (NZ2) and Deep Seek, the artificial intelligence app.

The impact of NZ2 and Deep Seek  in their respective fields has been such that western media leaders such as CNN, BBC and New York Times that regularly engage in anti-China reporting, as well as have ignored or marginalized Chinese achievements, have been reluctantly aroused to run stories on them, albeit with their mandatory negative comments. Meanwhile, missing from the mainstream media coverage is India’s decline from the 29th position in 2024 to its current 30th position in 2025.

Ne Zha2 Global Movie Megahit

Ne Zha2 (NZ2), the latest China produced animation film hit with its story line of family, friendship, loyalty and sacrifice encapsulated within a framework of Chinese mythology and techno wizardry has captivated movie audiences wherever it has been shown and is expected to generate more than US$2 billion in box office takings. This will make it the highest ranking box office animated film in the world. 

What’s appealing to movie fans, especially American audiences viewing it in the small number of cinemas it is showing – 300 of 9595 movie theatres – are not just the universal themes of courage and resilience but also the absence of messages relating to wokeness, political correctness, and attitude. 

Unlike in the West, where cultural dominance has been tied to colonial conquest and expansion, religion and political dominance, this example of film making and cultural influence is different. In today’s high-tech era, films like NZ2 demonstrate how technology, storytelling and cultural heritage can converge to create a new filmmaking and culture dissemination model rooted in non ideological equality and dialogue rather than the legacy western model with its message of white, Christian and ideological goodness, superiority and supremacy.

Movie audiences are no strangers to mythology-based storytelling. However, Chinese and other non-western mythology and story lines have been underexplored in the global entertainment world despite their rich history and universal themes. This is not only due to cultural and historical differences. It is more importantly an outcome of American dominance in the development of the movie industry since the early 20th century.

Hollywood – with US government support – has dominated the world box office for more than a century and helped to shape how audiences in Europe, Asia, Africa and Latin America view the US and the world. Whilst this continues today, the success of Ne Zha and its sequel should encourage small countries in their cultural confidence and ability to tell their own stories. This will impact their soft power influence and ranking among the countries of the world.

Deep Seek: Sputnik Moment and Bombshell Impact 

NZ2 comes on the heels of Deep Seek with the latter emerging like a bombshell in app stores around the world. As the most downloaded AI app, replacing Chat GPT, the Chinese AI model has significantly impacted the global tech industry by its cost-effective low budget development. This has caused major tech stocks to plummet and raised questions about the shifting power dynamics in the AI market. Many now see China as a major player in AI development that can challenge western AI apps presently dominating the market and tech giants such as Microsoft and Google.

What’s important to the estimated 5 billion smartphone users in the world – they account for over 60% of the world’s population – is not that it is a Chinese app but that it is free. For those using it, Deep Seek has pioneered and opened the door to an open source app that can be used and modified easily and without the need to pay a fee or royalty.

Deep Seek and NZ2 are not the only examples of China’s growing soft power in the world. They follow Huawei, BYD, TikTok, Red Note and other recent China innovations and products developed entirely or mainly with homegrown talent whose ripple effects are affecting and undermining US and western domination of the existing world order.

How will Trump’s MAGA Impact Global Power Balance

Perhaps the greatest asset to China’s influence in the world for now comes from an unlikely source – President Donald Trump. As the world’s greatest political influencer and news maker, Trump in his mission to make America great again has embarked on a foreign policy campaign that has made allies of the US realize that their client status makes it inevitable that their interests will be placed on the sacrificial table if they stand in the way of Trump’s redefinition of American hard and soft power, and the ensuing relations with Russia, China or any other adversary. 

This, combined with China’s burgeoning soft power achievements, and Belt and Road Initiative with its emphasis on economic development and regional connectivity to bring about shared prosperity, will result in the more rapid remaking of the current world order to a more equitable and inclusive

Lim Teck Ghee

Lim Teck Ghee PhD is a Malaysian economic historian, policy analyst and public intellectual whose career has straddled academia, civil society organisations and international development agencies. He has a regular column, Another Take, in The Sun, a Malaysian daily; and is author of Challenging the Status Quo in Malaysia.

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Trump: China's low-cost AI should challenge American firms

 

MIAMI, Jan 27 (Reuters) - U.S. President Donald Trump said on Monday that Chinese startup DeepSeek's technology should act as spur for American companies and said it was good that companies in China have come up with a cheaper, faster method of artificial intelligence.

"The release of DeepSeek, AI from a Chinese company should be a wakeup call for our industries that we need to be laser-focused on competing to win," Trump said in Florida.

Investors sold technology stocks across the globe on Monday over concerns the emergence of a low-cost Chinese artificial intelligence model would threaten the dominance of the current U.S.-based AI leaders.

U.S. President Donald Trump speaks during a House Republican members conference meeting in Trump National Doral resort, in Miami, Florida, U.S. January 27, 2025. REUTERS/Elizabeth Frantz/File Photo Purchase Licensing Rights, opens new tab

"I've been reading about China and some of the companies in China, one in particular coming up with a faster method of AI and much less expensive method, and that's good because you don't have to spend as much money. I view that as a positive, as an asset," Trump said.

"I view that as a positive because you'll be doing that too, so you won't be spending as much, and you'll get the same result, hopefully," he said.

Trump said Chinese leaders had told him the United States had the most brilliant scientists in the world, and he indicated that if Chinese industry could come up with cheaper AI technology, U.S. companies would follow.

"We always have the ideas. We're always first. So I would say that's a positive that could be very much a positive development. So instead of spending billions and billions, you'll spend less, and you'll come up with, hopefully, the same solution," Trump said. -Reuters

DeepSeek unveils hidden US market risk

Clearly, it’s hard to know where the DeepSeek panic will lead. — Bloomberg

THE S&P 500 Index plummeted as much as 2.3% on Monday over DeepSeek, a Chinese artificial intelligence (AI) startup that developed a model competitive with the US’s very best – and, supposedly, on the cheap.

Venture capitalist Marc Andreessen called it a “Sputnik moment,” a reference to the Russian satellite that set off the 1957-1960s Space Race.

Chip companies plummeted and so did many of the communications giants developing AI tools of their own.

But the ostensible pandemonium in the world’s biggest stock market was not as widespread as you might imagine, and it seemed to abate as the trading day wore on.

With DeepSeek hype still largely indistinguishable from reality, the main lasting lesson may be that diversification still matters.

Consider the following factoids about Monday, the worst intraday selloff of 2025:

> At the time of writing, 328 stocks on the S&P 500 were up.

> The median stock was up 0.7% and the average was down just 0.2%.

> Among sectors, healthcare, consumer staples, real estate and financials were all positive on the day.

> Information technology (IT) accounted for 95% of the index move.

> Nvidia Corp, which is behind cutting edge AI chips that are also eye-poppingly expensive, accounted for about two thirds of the decline on its own.

In other words, investors would have been in a privileged position on Monday morning if they had simply rebalanced their equity investments this year into equal-weight portfolios of large-cap stocks, instead of leaning into the increasingly AI-concentrated market-capitalisation- weighted S&P 500 Index or Nasdaq 100.

I’ll admit it: betting against the cap-weighted index has been a losing proposition for the past decade and a half, but concentration risk has become a more acute problem for investors in the past two years.

S&P 500 Index investors’ exposure to IT and communication services companies is at its highest since the dot-com bubble.

Overweight tech

Tech and communications services add up to 41% of the S&P 500. And just seven companies account for about a third of the entire index by weighting.

Nvidia alone had a greater weighting than five of the 11 sectors represented in the index.

That concentration is a big reason why a Goldman Sachs Group Inc report in October suggested that the S&P 500 would deliver an annualised total return of just 3% over the next decade (or only about 1% per year if you adjust for inflation).

“Our historical analyses show that it is extremely difficult for any firm to maintain high levels of sales growth and profit margins over sustained periods of time,” Goldman wrote at the time.

It’s always technically possible that today’s index giants continue to outperform, but history is working against us.

Similarly, the research suggests that market concentration is associated with greater volatility going forward.

If the market truly underwhelms over the next decade, it may well be in the form of a crash followed by a long, gruelling recovery – rather than 10 years of nearly flat real returns.

Fortunately, elementary mitigation strategies are easy to implement, and you don’t even need options (in fact, tail hedges are very inefficient in slow-moving bear markets like the dot-com bust).

The Goldman report suggested that the equal-weighted version of the S&P 500 could outperform the S&P 500 by 200-800 basis points in the decade.

Additionally, the juicy income benefits of bond ownership may give new life to 60/40-type mixed asset class portfolios.

And investors may finally take the opportunity to add some exposure to unloved international stocks, as well as small- and mid-capitalisation US stocks that can still benefit from a strong macroeconomic backdrop.

Clearly, it’s hard to know where the DeepSeek panic will lead.

Companies representing about 38% of the S&P 500 by weighting are expected to report earnings this week, and those announcements should provide some insight into how US executives are processing the developments and help us sort hype from reality.

Even in a scenario in which the narrative proves well-founded, it’s entirely possible that a cheaper path ahead for AI turns into a net positive for many publicly traded US companies, including companies developing AI-related software, and end users.

But first, Monday’s market action may shake index tracking investors out of their complacency.

For all the strengths of the US economy and stock market, the index’s composition is tilted strongly in favour of the spectacular AI story and the premise that we’ve correctly identified the market winners.

Odds are that we have the narrative at least a little bit wrong, and investors should expect to pay for their lack of true diversification with ongoing volatility and perhaps even subpar total returns. — Bloomberg

- by Jonathan Levin,  a columnist focused on US markets and economics. The views expressed here are the writer’s own.

Chinese AI app DeepSeek tops Apple App Store’s free downloads in China and US, outpacing ChatGPT

deepseek

Chinese artificial intelligence (AI) app DeepSeek topped the Apple App Store's free downloads in both China and the US on Monday, outpacing ChatGPT in free downloads in the US. 

Following the momentum, DeepSeek-related stocks rallied strong on Monday's opening with multiple stocks opening more than 10 percent higher. 

Chinese AI startup DeepSeek in January released the latest open-source model DeepSeek-R1, which has achieved an important technological breakthrough - using pure deep learning methods to allow AI to spontaneously emerge with reasoning capabilities, the Xinhua News Agency reported. 

In tasks such as mathematics, coding and natural language reasoning, the performance of this model is comparable to the leading models from heavyweights like OpenAI, according to DeepSeek.

The app soon sparked global attention, which has Silicon Valley marveling at how its programmers nearly matched American rivals despite using relevantly less-powerful chips, according to a report from the Wall Street Journal (WSJ) on Sunday. 

For instance, "Deepseek R1 is one of the most amazing and impressive breakthroughs I've ever seen," said Marc Andreessen, the Silicon Valley venture capitalist who has been advising President Trump, in an X post on Friday.

Barrett Woodside, co-founder of the San Francisco AI hardware company Positron, said he and his colleagues have been abuzz about DeepSeek. "It's very cool," said Woodside, pointing to DeepSeek's open-source models in which the software code behind the AI model is made available free, per the WSJ report.

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DeepSeek and its effect on M’sia

Analysts are largely of the view that US president Donald Trump is unlikely to alter the directive set by former president Joe Biden regarding the limitations on exporting AI chips from the United States.

PETALING JAYA: The domestic technology sector could be in for more uncertainties as Chinese startup DeepSeek launches a free, open-source artificial intelligence (AI) model that experts say rivals OpenAI’s ChatGPT.

This comes amid heightened tensions in the AI trade, which saw a sell-off in the technology sector earlier this month after the Biden administration announced new restrictions on the export of advanced semiconductors and AI technology, citing national security concerns.

Under the new rules, Malaysia was placed in a category allowed to procure only a fixed and limited amount of such advanced technology, potentially constraining the development of its AI capabilities.

Subsequently, the local construction sector was downgraded by at least two research houses, on the basis that many of these contractors had factored in work related to the construction of data centres in Malaysia.

Analysts are largely of the view that US president Donald Trump, who aims to establish the United States as the global leader in AI, is unlikely to alter the directive set by former president Joe Biden regarding the limitations on exporting AI chips from the United States.

However, Tradeview Capital Sdn Bhd portfolio manager Ng Tzyy Loon said DeepSeek’s AI chatbot may throw the effectiveness of the proposed AI export control order into question.

“The US’s strategy to limit the development of AI in other countries by controlling their access to top-tier computing power and technology may not achieve its intended goals, as proven by the creation of DeepSeek,” he told StarBiz.

Last December, DeepSeek launched its DeepSeek-V3 model, which was reportedly developed at a much lower cost of US$5.6mil. In contrast, the training of OpenAI’s ChatGPT-4 model had reportedly required an investment of around US$100mil.

On Jan 20, the startup released another AI model, the DeepSeek-R1, which is said to rival OpenAI’s o1 (designed to complement ChatGPT) reasoning capabilities, sparking concerns over US tech dominance and prompting a reevaluation of technology companies’ lofty valuations.

The Bursa Technology Index has slipped by 0.88% since Monday. Yesterday, local technology or data centre-related stocks like YTL Power International Bhd, Inari Amertron Bhd, Nationgate Holdings Bhd and PIE Industrial Bhd fell by as much as 3%, 2%, 5% and 2%, respectively.

Major Wall Street indexes also tanked as the market digested the release of DeepSeek-R1.

The S&P 500 tumbled 1.5% while the tech-heavy Nasdaq composite sank 3.1%.

The blue-chip Dow Jones Industrial Average, which is less dependent on tech stocks, gained more than 0.6% with investors flocking to more defensive sectors.

Major tech counters like Nvidia Corp and ASML Holding NV slid as much as 17% and 6%, respectively.

Ng noted one notable aspect of DeepSeek’s AI models is their use of Nvidia’s H800 chips for training, which are not top-of-the-line chips like Nvidia’s H-100 of which the Biden administration’s latest export controls had planned to target.

“This shows that restricting access to top-tier chips may not prevent advancements in AI development, as companies can innovate around these limitations,” he said.

While this may be the case, it is important to note that the H-800 chip itself has been included in the US export restriction list since 2023.

Tradeview’s Ng also pointed out the cost and complexity of monitoring and tracking AI chip usage make enforcement highly challenging for the United States.

“While the US government can track where the AI chips are distributed, enforcing such restrictions is challenging, given the number of countries, such as Singapore, that are eager to advance their AI capabilities.

“Countries may also find ways to smuggle in AI chips like what China does, making it difficult to monitor effectively,” he said.

Ng is of the view that Trump may employ a more pragmatic approach in going about Biden’s proposed AI export control order.

“I think he may repeal the order or at the very least, adjust the rules to make the restrictions less stringent,” he said.

In a report yesterday, Kenanga Research said all eyes are now on Big Tech’s response to the AI capital expenditure ahead, with concerns surrounding the risks of a smaller addressable market for high-end chips.

“On the heels of big spending announcements of a whopping US$500bil under the joint-venture entity Stargate, the pledge to spend multiple billions by Big Tech will likely come under more scrutiny, as we expect them to carefully evaluate strategies given this AI development.

“Demand for state-of-the-art chips will still be intact in our view for firms that are pushing the envelope in developing frontier large language models, or put simply, the most advanced and cutting-edge models to understand and generate text,” the research house said.

As for the data centre play in Malaysia, Ng said it remains intact in the near term looking at the committed data centres here. However, there may be delays or uncertainties around new data centre projects.

“This is because the graphics processing unit (GPUs) already committed are well below the levels planned by major players like Nvidia and Amazon globally.

“For now, the impact should be manageable in the near to medium term, but beyond three years, further expansion could become challenging if the restrictive AI executive order really comes through,” he said.

BMI telecoms and technology industry analyst Niccolo Lombatti said it is important to note that not all Malaysian data centres rely on US-supplied chips.

“The decision of what chips to use is largely a function of its intended use case and therefore its design.

“On the one hand, some Malaysian data centres can utilise a lower number of US-supplied GPUs or chip alternatives from non-US vendors because they are looking to address demand from non-AI related use cases, or less intensive AI use cases, thus insulating them from the AI executive order’s effects,” he explained.

Nonetheless, Lombatti said the main risks arise for data centres targeting high-density AI applications, particularly those in Johor aiming to attract Singapore-based customers seeking rack densities up to or even in excess of 120 kilowatt

“Therefore, Malaysian data centres designed around high-density racks using the latest US-manufactured GPUs face greater risks over the next few years. Owners may need to slow development or scale back to lower-density designs, leading to significant capital expenditure inefficiencies,” he said.

Ng remained optimistic the country will be able to continue to attract data centre investments, underpinned by Malaysia’s cost competitiveness in terms of land, labour and electricity.

“Additionally, Malaysia’s proximity to Singapore is a key factor. The geographical location is crucial for data transfer and connectivity, and many global players already have data centres in Singapore,” he said.

On this note, Kenanga Research said contractors are more insulated in the AI race to roll out data centres given the emergence of DeepSeek could accentuate Malaysia’s position in being able to provide the brick and mortar for the data centre competitively.

As for YTL Power, the research outfit said the negatives are priced in with data centres fully discounted in its share price. At this juncture, firm takers for YTL Power’s AI data centre GPU as a service may still be needed to re-rate the stock.

YTL Power International Bhd, Inari Amertron, Nationgate Holdings and PIE Industrial closed at RM3.11, RM2.52, RM1.79 and RM4.57, respectively, yesterday.

By ELIM POON

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