DeepSeek and ‘Ne Zha 2’ are bringing back what Xi ignored

Shuli Ren, Bloomberg

Confidence can be elusive. Even the most tenacious need a few wins from time to time, to cast away self doubt and believe in themselves again.

This is exactly what DeepSeek’s reasoning model R1 and the animated movie Ne Zha 2 are doing for the Chinese. Released late last month before the Lunar New Year holiday, they each provide a rare dose of optimism for a nation dealing with a prolonged economic downturn. Till now, many fear that their future, just like the Japanese in the 1990s, may be lost for decades to come.

Both are impressive products that show China is more than a manufacturing powerhouse. While DeepSeek created an AI reasoning model almost as powerful as OpenAI at a fraction of the cost, Ne Zha 2 is shattering global box office records. The film, about an ugly, demonic child fighting monsters and immortals that’s loosely based on Chinese mythology, has made $1.9 billion, the highest-grossing non-English-language movie of all time.

There’s of course national pride. But more relevant for the middle class, these two products demonstrate that astounding success can still be achieved at the grassroots level, and that innovative breakthroughs do not necessarily have to come from the top 1%. DeepSeek, for one, did not come from the campuses of the prestigious universities of Tsinghua or Fudan. Its founder, Liang Wenfeng, went to Zhejiang University, a respected institution but by no means China’s Harvard.

The story of Yang Yu, the director of Ne Zha 2, is even more inspirational. Born in a small city in the southwest Sichuan province, Yang, known as Jiaozi or dumpling in Chinese, was a pharmacist by training but realized at college that he was not interested in medical sciences. After graduation, he stayed home for more than three years and taught himself animation. It was a tough time then: His father passed away and the whole family lived off his mother’s meagerly 1,000 yuan ($138) monthly pension.

Yang’s story must have struck a chord with many. “Professional children,” or young stay-home adults, have become a social phenomenon since the pandemic, as the government’s regulatory crackdowns on big tech and the real estate sector erased the quality jobs fresh college graduates had coveted. Parents are anxious, not knowing when and how their often only children can find footing in society. Will their offspring, who studied liberal arts and commerce, slip through the cracks as President Xi Jinping wholeheartedly pursues industrial upgrades at the expense of everything else?

Defiance and parental love are two constant themes that run through the film.

DeepSeek and Ne Zha are just what the Chinese need right now. They are reminders that one can still carve out a path of her own without going to the best schools, or being born into the right families, just as economic growth slows, inequality widens and many feel that the path to success is narrowing.

This perhaps explains why Chinese tech stocks are defying gravity this week, even as trade tensions with the US flared up again and President Donald Trump’s administration was reportedly seeking to toughen chip controls over China.

Just think about it, a professional child fond of animations has become a millionaire many times over doing what he loves to do. Many of us can recognize that Peter Pan among our own families and friends. This has provided a huge boost. China’s animal spirit is coming back. [Abridged]

Courtesy Bloomberg/Shuli Ren