China is drafting a $295 billion plan to build a national network of AI data centres over the next five years, relying on local suppliers for at least 80% of core technology. The initiative targets reducing dependence on American AI chips, particularly from Nvidia and AMD.
- China to spend $295 billion on national AI data centres through 2028
- Plan mandates 80% of AI tech sourced from Chinese suppliers like Huawei
- Chinese strategy aims to sever reliance on US chipmakers Nvidia and AMD
What happened
China is preparing to invest approximately 2 trillion yuan (around $295 billion) over the next five years in building a nationwide AI data centre network. The project, led by the National Development and Reform Commission, will create an interconnected AI computing grid consolidating the country's dispersed facilities. Large state telecom companies such as China Mobile and China Telecom will manage much of this infrastructure.
A key feature of the plan is the explicit requirement that at least 80% of the core hardware and AI chips be sourced from domestic suppliers including Huawei. This aims to effectively exclude leading American semiconductor companies like Nvidia and AMD from the Chinese AI market. The financing strategy combines sovereign debt instruments, long-term government bonds, strategic state funds, bank lending, and private capital.
Why it matters
The plan signals China's strategic push to reduce its reliance on US technology amid ongoing geopolitical tensions and a global push for technology sovereignty. By fostering homegrown AI chip makers and mandating their use in critical national infrastructure, China aims to close the technology gap with the US and assert independence in the fast-evolving AI ecosystem.
Though the $295 billion figure is less than current AI investments by Western tech giants like Meta and Microsoft, the value lies in the coordinated national approach. The state’s direct involvement in funding, resource allocation, and infrastructure development reflects a uniquely centralized drive. This effort marks the growing global trend of countries erecting AI and tech ecosystems that are less globally integrated and more self-reliant.
What to watch next
Stakeholders should monitor the plan’s development details, including any changes in domestic chip production capacity and the extent of foreign technology exclusion. The speed with which Chinese companies like Huawei, Alibaba, and emerging AI chipmakers scale up proven, secure solutions will be critical to the plan’s success.
The initiative’s impact on global AI supply chains and market competition also bears watching. As China and the US each attempt to segregate their AI technology stacks, expect further moves to nationalize AI infrastructure and embed sovereignty principles in digital economies around the world. The evolving regulatory environment and trade policies will play a pivotal role in shaping this bifurcated AI landscape.