China Pours More Fuel On The AI Arms Race Fire

China is planning a massive data center buildout over the next five years estimated to cost around $295 billion, Bloomberg reported Tuesday.

State-owned companies will be operating the majority of data centers, according to Bloomberg. China Mobile Ltd. and China Telecom Corp among others will be running the data centers and ensuring their connectivity, Bloomberg reported.

U.S. companies Meta and Microsoft have allocated $725 billion for data centers this year alone, according to Bloomberg. This comparison does not account for the lower cost of labor and therefore of construction in China nor does it account for the money invested by private companies in China, Bloomberg stated.

The buildout will strengthen the Chinese AI sector and threaten to surpass that of the United States, Bloomberg reported.

China will be using chips manufactured domestically instead of importing chips produced by tech hardware giant Nvidia or by AMD, according to Bloomberg.

Nvidia CEO Jensen Huang declined to testify before Congress about his business’ involvement with China and about chip export controls at a hearing scheduled for June 11. He instead invited the Senate Banking Committee to meet at Nvidia headquarters, CNBC reported Monday.

Although the U.S. government has permitted Nvidia to sell older and lower quality chips to China, those components have not yet been shipped into the country. The Chinese government is blocking Nvidia chip importation in order to promote its own AI chip industry, Bloomberg reported May 15.

The U.S. government has been working to prevent Chinese firms from accessing Nvidia’s more advanced chips which have not been approved for export to China, Reuters reported June 1. Nine Chinese-built chip types have been approved for use in higher security sectors by the Chinese government as of May, according to the more recent Bloomberg report.

China will fund this buildout primarily by issuing more debt, Bloomberg reports. As of 2026 China’s government debt has surpassed its GDP, according to the IMF.

China’s National Development and Reform Commission and Nvidia did not immediately respond to requests for comment.