The race for global artificial intelligence dominance fuels an unprecedented capital spending surge in China. Analysts predict the nation’s total AI capital expenditure (capex) will approach nearly $100 billion in 2025. This massive investment, potentially representing a growth rate of almost fifty percent year-over-year, signifies Beijing’s aggressive commitment to technological self-reliance. The AI push stems from significant government investment and substantial commitments from major private internet firms.
Chinese tech giants like Alibaba Group and Tencent Holdings announced multi-billion-dollar investment plans. These companies rapidly accelerate their development of proprietary large language models. The success of domestic startups, notably DeepSeek, further fueled this investment enthusiasm across the sector. DeepSeek demonstrated high-performing AI models can be developed more efficiently than previously thought.
Crucially, the capital spending shift expands far beyond the typical high-growth semiconductor companies. Investors and analysts now recognize a crucial physical infrastructure bottleneck. The next wave of beneficiaries includes firms providing the physical foundations necessary to power and cool vast AI data centers. Experts forecast that supporting facilities, including power and cooling systems, will absorb approximately one-third of China’s total AI expenditure by 2030.
This infrastructure boom translates directly into increased demand for power utilities and equipment manufacturers. Data centers consume enormous amounts of electricity. This will significantly boost electricity capacity requirements for years to come. In fact, some analysts project the growth in China’s power demand could double by 2030, driven largely by the data center buildout.
Furthermore, the construction frenzy increases demand for basic materials. Data centers require metals like copper and aluminum for cabling and structural components. Copper demand in particular is expected to see steep growth through the rest of the decade due to its extensive use in these high-performance computing facilities. Specialized cooling is also a major growth area. The efficiency needs of next-generation AI processors necessitate advanced liquid cooling solutions, pushing growth rates in that segment to staggeringly high levels.
Strategically, this massive investment drive is China’s response to geopolitical competition. The country continues to build its computing capacity despite facing US export restrictions on advanced chips. The state-driven approach contrasts with the US model, which relies more heavily on private sector spending. While Chinese firms still rely on some foreign components, the spending aims to accelerate the adoption of domestic AI chips. Finally, Chinese internet hyperscalers are slowly beginning to monetize their AI models, generating subscription and enterprise revenue from use cases like video generation and image editing. This provides a positive sign for the sector’s long-term commercial viability.
