China's New Narrative Logic: From DeepSeek to Shanghai's "Six Small Dragons"
Song Chunyu/Photographer
Securities Daily Reporter Zhang Shuxian
Shanghai Finance University President Liu Yuanchun stated at the 13th Entrepreneurship Investment Conference and National Entrepreneurial Association Alliance on July 25 that DeepSeek has opened up a new narrative logic for China, breaking through the dominant mode of high-cost investment in AI models by the United States.
Following DeepSeek, concepts such as Shanghai's "Six Small Dragons" and Shenzhen's "Eight Great Golden Dragon" emerged. Liu Yuanchun said that tracing back these concepts will find that China's narrative logic is rising comprehensively, which is a pattern of rise, a phenomenon-level or era-level development story.
Liu Yuanchun analyzed that the core foundation of China's narrative logic is the Chinese innovation system's departure from its previous mechanism and creation of new miracles in terms of competitiveness. Firstly, large markets foster big innovations. The Chinese market is not only a value market but also a capital, technology, and data "three-in-one" super-large market. Secondly, China's talent dividend and engineer dividend are gradually emerging, making China's advantages more pronounced in the fourth industrial revolution.
Thirdly, in terms of industry equipment and support, China has a well-structured industrial chain with long supply chains and rapid digital transformation. Lastly, "Made in China" is transforming into "Innovative China" and "Intelligent China."
Regarding the reasons why China can achieve overtaking and rise, Liu Yuanchun believes that the key factor lies in China's departure from a new technological path, where three major tools - basic research + industry upgrading + financial innovation - have formed a system and are presenting different patterns in various regions.
Liu Yuanchun also believes that changes in the narrative logic of the United States are the core driving force behind China's narrative logic change, "whether the US economy accelerates its decline is a key factor for narrative logic change; US main investors' judgment and investment layout are adjusting: they want to invest in both the US and find another alternative port, as the former has too high risks."
"Of course, we hope this alternative port is China. But does China have the 'US+1' level of financial market investment function and bearing capacity? If not, how can we create such new functions?" Liu Yuanchun said. "This kind of global repositioning means a series of new opportunities and challenges for us."
Liu Yuanchun emphasized that China's asset revaluation must have strong micro-finance foundations. From the ROE perspective, China's assets may have experienced some rebound recently, but they are still at historical lows. It is also necessary to look at the severe constraints on technological progress caused by overcapacity in China, which affect micro-finance indicators and may lead to a bubble in AI fields.
"These problems indeed make us very worried, as they may lead China into a new paradox." Liu Yuanchun said. "Basic research is fine, industry upgrading is fast, but enterprises are not making money."
How to resolve this paradox? Liu Yuanchun said that this paradox has occurred in human history before. The United States once experienced two rounds of major innovation and leapfrog development accompanied by overcapacity, most notably during the 1929-1933 period, when it implemented many radical measures and some of which are worth learning from. At the same time, China also needs to delve into research on how to address strategic emerging industries and future industrial development issues, rather than simply copying foreign models.
"In market mode, financial sustainability, and market clearance between scales, China must find a balance and take out a new path." Liu Yuanchun said. "This is the key to policy-making, as we still have much work to do in the systems of basic research, industry upgrading, and micro-performance."
Liu Yuanchun emphasized that China must maintain the essence of its own mode during the governance process of overcapacity, rather than simply copying others' plans. He believes that the formation of new patterns is another policy foundation for China's further development.