China’s core AI industry – with more than 6,200 companies – is estimated to be around $174bn by 2025.
China plans to spend about $295bn – or 2trn yuan – over the next five years to build data centers across the country, Bloomberg news reports, citing sources close to the matter.
The development could represent China’s most aggressive plan yet to secure the future of its AI sector, the publication reported.
The idea is for a robust Chinese AI industry with an interconnected data center network and a growing reliance on foreign technology from companies such as Nvidia and AMD. China is also planning to integrate its power grid with the project, the sources added.
The funds earmarked for the project, however, pale in comparison to the likes of Meta, which has capital expenditure planned to reach $145bn this year alone, or Alphabet, which has earmarked up to $190bn. Much of this spending is earmarked for AI or computing-related investments.
The government spending figures, however, do not account for private investment in AI in China, which is estimated to reach $12.4bn by 2025.
Recent reports suggest that Chinese AI darling DeepSeek is reportedly about to raise $7.4bn backed by the likes of Tencent and Contemporary Amperex and the state-backed $8bn National Artificial Intelligence Industry Investment Fund.
While Alibaba led a $293 million funding round for ShengShu Technology, the Beijing-based startup behind the Vidu AI video production tool.
China’s core AI industry – with more than 6,200 companies – is worth about $174bn by 2025, according to a government statement in March. While market research firm International Data Corporation has put China’s AI market at $63bn by the end of 2025, and estimates expect it to exceed $200bn by 2029.
The publication reported that key Chinese agencies, including the National Development and Reform Commission, are in early discussions to create a blueprint for a network of interconnected computer hubs across the country. The details of the first-stage talks, however, could change, the sources added.
These funds are reportedly expected to operate on private debt, including long-term government bonds, government funds earmarked for investment in strategic industries, and bank loans and private equity.
The plan forms an important part of the “six networks” plan announced earlier this year, which plans to build computer, water, communications, urban underground pipelines and transportation networks, and power grids, the sources said.
Local suppliers, including Huawei, must buy in at least 80pc of the required technology, such as AI chips, while state-owned companies such as China Mobile and China Telecom are expected to control most of the data centers.
China is aggressive in protecting home-grown technology. According to the laws, the country’s authorities need to approve the export of certain key technologies, including AI.
Earlier this year, the country took action against Meta for its purchase of China-based AI company Manus, demanding that the US tech giant rescind the deal and return Manus’ Chinese assets to their original state.
Meanwhile, the US government last week moved to close a loophole that would have helped companies ship US-made chips to Chinese subsidiaries outside of China.
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