DeepSeek, an open-source artificial intelligence app founded by a tech entrepreneur with close ties to the Chinese government, knocked a US$1 trillion-sized hole in an AI-fueled rally on global stock markets this week when it topped app charts ahead of U.S.-rival ChatGPT.

The fresh challenge to U.S. dominance in the sector comes from a firm at the core of the Chinese government’s vision for an economic recovery driven by high-tech innovation.