China Plans to Allocate 2 Trillion Yuan to Build National Computing Power Network, Aiming for 80% Localization Rate of AI Chips

According to DynaBeat Monitoring, insiders revealed that China is planning to invest around 2 trillion yuan (approximately $295 billion) in the next five years to build a nationwide data center network, aiming to drive the domestic AI industry development and surpass the United States in key technological competition.

The National Development and Reform Commission and other core government departments are leading the drafting of the computing power network blueprint, planning to connect the dispersed computing resources across the country. State-owned telecom giants such as China Mobile and China Telecom will undertake most of the data center operation and interconnection work to ensure the network achieves overall connectivity by 2028. With complementary projects such as grid upgrades, the total investment in the overall project is expected to reach 5 trillion yuan.

In terms of hardware and software procurement, the blueprint proposes that at least 80% of AI chips and other technical equipment must use products from domestic suppliers such as Huawei, further squeezing the market share of U.S. chip giants like NVIDIA and AMD in China.

Although the U.S. has agreed to sell the previous-generation H200 chips to Chinese buyers, actual shipments of the H200 chips have not yet started due to China's increasing confidence in domestic alternative chips. In May of this year, 9 domestic AI chips, including those from Huawei, Alibaba, Horizon Robotics, and Moore Thread, have passed the security assessment of the national technology security agency, clearing the way for widespread adoption of domestic chips in sectors with high security requirements such as finance, healthcare, manufacturing, and logistics.

The computing power network construction plan has been included in the "Six Major Networks" national strategy announced earlier this year (covering infrastructure construction such as water conservancy, electricity, and computing power). The funds will mainly be raised through the issuance of ultra-long-term special government bonds with a term of more than 10 years and the National Strategic Industry Investment Fund. Bank loans and private capital will also serve as supplements.

Although the total budget of 2 trillion yuan is still lower than the AI capital expenditure of U.S. tech giants such as Meta and Microsoft in just one year (about $725 billion), thanks to China's cost advantages in labor, construction, and components, coupled with local government subsidy policies, the conversion of the budget into actual computing power efficiency remains significant.