China is plotting a massive $295 billion data center network over the next five years, aiming to supercharge its domestic AI industry and outpace the US in the critical technology race.
Sources familiar with the matter say the National Development and Reform Commission and other key government bodies are drafting a blueprint to connect scattered computing resources into a unified national network. State telecom giants like China Mobile and China Telecom will operate and interconnect most of the data centers, with the goal of having the network fully operational by 2028. Including supporting projects like grid upgrades, total investment could reach 5 trillion yuan (about $725 billion).
On the procurement side, the plan would require at least 80% of AI chips and other tech equipment to come from domestic suppliers like Huawei — a move that would further squeeze US chip giants Nvidia and AMD out of the Chinese market.
Although Washington has agreed to allow sales of older H200 chips to Chinese buyers, actual shipments haven't started yet, in part because Beijing is gaining confidence in homegrown alternatives. In May, nine domestic AI chips — from companies including Huawei, Alibaba, Biren Technology, and Moore Threads — passed security reviews by the state's tech security agency, clearing the way for widespread deployment in sensitive sectors like finance, healthcare, manufacturing, and logistics.
The compute network plan is part of the broader "Six Networks" national strategy announced earlier this year, which covers everything from water infrastructure to power grids and computing. Funding will come primarily from ultra-long-term special government bonds (10+ years) and a strategic industry national investment fund, supplemented by bank loans and private capital.
Sure, the $295 billion budget is still less than what Meta and Microsoft are spending on AI capex this year alone (around $725 billion), but with China's low labor costs, construction efficiency, and local government subsidies, they'll likely get more computing bang for their buck.