China’s AI capital spending set to reach up to US$98 billion in 2025 amid rivalry with US

Government investment is expected to account for US$56 billion, while China’s major internet firms are projected to contribute US$24 billion

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China’s increased capital spending on artificial intelligence reflects the heightened enthusiasm for the technology on the mainland. Photo: Shutterstock

Published: 7:00pm, 25 Jun 2025

Capital expenditure on artificial intelligence (AI) in China is forecast to reach 600 billion yuan to 700 billion yuan (US$84 billion to US$98 billion) this year, according to a Bank of America (BofA) report, as the mainland and the United States race for primacy in the vital technology.

That would represent as much as a 48 per cent overall growth this year for China’s AI capex from 2024, BofA Securities’ co-head of China equity research Matty Zhao, who also heads Asia-Pacific basic materials, oil and gas research at BofA Global Research, said in an interview on Monday.

Government investment is expected to account for up to 400 billion yuan of total AI spending on the mainland, according to the BofA report published earlier this month. China’s major internet companies, meanwhile, are projected to contribute as much as 172 billion yuan.

Spending attributed by BofA to the country’s large telecommunications network operators and special-purpose bonds makes up the rest of the forecast AI capex.

The predicted surge in China’s AI spending in 2025 reflects the heightened enthusiasm for the technology on the mainland on the back of DeepSeek’s success.

The Hangzhou-based start-up generated worldwide attention earlier this year after consecutively releasing two advanced open-source AI models, V3 and R1, developed at a fraction of the cost and computing power that major tech firms typically require for large language model (LLM) projects. LLM refers to the technology underpinning generative AI services such as ChatGPT.

Following DeepSeek’s accomplishment, Chinese Big Tech companies, including Alibaba Group Holding and Tencent Holdings, announced plans for increased AI investments, BofA’s Zhao said. Alibaba owns the South China Morning Post.