China Prepares $295 Billion Plan to Fund Nationwide AI Build-Out, Bloomberg Reports

China is preparing to spend approximately 2 trillion yuan ($295 billion) over the next five years on building data centres across the country, Bloomberg News reported on Tuesday, as Beijing looks to challenge the United States in the intensifying artificial intelligence (AI) race.

The National Development and Reform Commission is among key government agencies drafting a blueprint to build a network of interconnected computing hubs across the country, the report said, citing people familiar with the matter.

China's new five-year policy blueprint laid out its ambitions to aggressively adopt AI throughout the world's second-largest economy and dominate emerging technologies such as quantum computing and humanoid robots.

Local Suppliers to Dominate

State-owned firms such as China Mobile and China Telecom will operate the bulk of the data centres and ensure they are connected, according to the Bloomberg News report. The plan aims to rely on local suppliers, including Huawei Technologies, for at least 80% of technology such as AI chips — effectively squeezing out US-based Nvidia (NVDA) and Advanced Micro Devices (AMD).

The data centre blueprint remains in early discussions, and details could change, the report added.

Context and Comparisons

The proposed Chinese spending comes as Big Tech companies in the United States are expected to spend more than $700 billion this year to fund their AI build-out plans.

Reuters reported last year that the Chinese government issued guidance requiring new data centre projects that have received any state funds to use only domestically made AI chips.

China Mobile, China Telecom, and the National Development and Reform Commission did not immediately respond to Reuters' requests for comment.

Market Sentiment:

The sentiment is cautiously strategic, reflecting China's determination to achieve technological self-sufficiency in AI infrastructure despite US export controls. The $295 billion five-year plan is substantial but notably smaller than the combined annual AI capex of US Big Tech ($700 billion+ this year alone), suggesting China is prioritising efficiency and domestic supply chains over sheer spending scale. The requirement for at least 80% local content — including Huawei AI chips — formalises a de facto policy of substituting Nvidia and AMD hardware. For Nvidia, this represents a significant long-term loss of a major market, though the company has already been restricted from selling its most advanced chips to China. For Huawei, the plan is a major opportunity to scale its Ascend AI chip business, though production capacity and software ecosystem remain challenges. The involvement of state-owned telecom operators (China Mobile, China Telecom) ensures execution but may introduce bureaucratic inefficiencies. Rising gasoline prices and global inflation have a less direct impact on this state-directed spending, but China's broader economic slowdown could pressure funding availability. For global investors, this plan reinforces the decoupling trend: the US and China are building separate AI infrastructure stacks, with different suppliers, standards, and ecosystems. The success of China's plan hinges on whether domestic chips can achieve competitive performance and reliability relative to Nvidia's offerings. If Huawei and others succeed, it would reshape the global AI chip market. If they fall short, China's AI ambitions may be constrained by inferior hardware. The early-stage nature of the blueprint (details could change) suggests the market will watch for concrete spending commitments and technology milestones. Overall, this is a significant strategic move that underscores AI's centrality to national competitiveness, but execution risks are substantial. The plan is necessary for China to maintain AI development momentum under export controls, but it is not a guarantee of success. The next 2 - 3 years will reveal whether domestic alternatives can close the gap. For now, the market is treating this as a positive signal for Huawei and local supply chain companies, while acknowledging the long-term revenue loss for Nvidia and AMD.

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