By Gleb Bryanski

MOSCOW (Reuters) - Sberbank plans to collaborate with Chinese researchers on joint AI projects, a top executive at Russia's biggest bank told Reuters, as China's DeepSeek has upended the tech landscape by creating an AI model much more cheaply than U.S. rivals.

Russia and China, which share what they call a "no limits" strategic partnership, have long talked about AI cooperation - including in military applications - but little is publicly known about its depth or scope.

Sberbank, under CEO German Gref, has transformed itself from a Soviet-style former state savings bank burdened by onerous bureaucracy into one of Russia's leading players in artificial intelligence and released its GigaChat model in 2023.

"Sberbank has many scientists. Through them, we plan to conduct joint research projects with researchers from China," Sberbank First Deputy CEO Alexander Vedyakhin told Reuters. He did not specify who the bank plans to collaborate with in China.

DeepSeek, a Hangzhou-based startup, sent shockwaves through global markets last month as investors bet that its low-cost models would threaten the dominance of U.S. leaders such as Nvidia.

A potential AI alliance between Russia and China, cast by Washington as the biggest nation state threats to the West, could further shake up the AI sector worldwide amid a race between China and the United States for AI dominance.

President Vladimir Putin and Xi Jinping share a broad world view which portrays the West as decadent and in decline, as China challenges U.S. supremacy in everything from AI and quantum computing to synthetic biology and hard military power.

The West's attempts to isolate Russia over the war in Ukraine have pushed Moscow and Beijing closer - and Putin has in recent months described China as an "ally".

"China is a partner of Russia on many issues of the international agenda, and the level of scientific cooperation between our countries can be strengthened through collaboration between our scientists," Sberbank's First Deputy CEO added.

AI ALLIANCE?

Putin has instructed Sberbank, which is under Western sanctions, to build cooperation with China and other BRICS nations in AI to challenge U.S. dominance. But the true state of Russia's own AI projects is hard to assess as some are secret.

Like China, Russia is struggling to develop domestic computing capacity due to sanctions that restrict imports of the latest Western hardware, and is seeking alternative solutions to remain competitive in the AI race.

Russia currently ranks 31st out of 83 countries for AI implementation, innovation, and investment according to UK-based Tortoise Media's Global AI Index, trailing not only the United States and China but also fellow BRICS members India and Brazil.

Vedyakhin said that since the launch of DeepSeek's models, Sberbank has compared them to GigaChat MAX, its most advanced model, establishing that the Chinese rival was superior in scientific tasks, while GigaChat was on par or better in banking.

Vedyakhin noted that DeepSeek's success aligns with Sberbank's strategy of finding low-cost solutions instead of investing billions in computing infrastructure megaprojects like Stargate, a venture announced by U.S. President Donald Trump.

"DeepSeek has proven that even with reduced capabilities, it is possible to achieve quality on par with American models. This raises questions about the necessity of extreme investments when there are engineering innovations," Vedyakhin said.

Vedyakhin said that, like the creators of DeepSeek, Sberbank has made most of its AI platforms publicly accessible, including the text-to-image model Kandinsky, named after the 20th-century avant-garde painter Vassily Kandinsky, and its base model GigaChat Lite.

"The success of DeepSeek is largely due to its transparency, which contrasts with the secrecy of OpenAI. This has attracted a huge community," Vedyakhin said.

(Reporting by Gleb Bryanski; Editing by Guy Faulconbridge and Alexander Smith)