Punching above their weight: how China’s AI giants stretch each dollar in compute race
The massive gap in artificial intelligence spending between US and Chinese tech titans may not buy the advantage expected for American giants, as lower domestic costs and heavy state support allow Chinese firms to secure far more computing power per dollar, according to a new report by Moody’s Ratings. While US hyperscalers outspent their Chinese counterparts by a staggering margin, the physical…
A recent report from Moody’s Ratings highlights that China's AI giants are stretching their dollars farther in the compute race compared to their US counterparts. Despite US tech behemoths outspending Chinese firms by a significant margin, the gap in computing power is not as vast as expected. Factors such as lower buildout costs, targeted policy incentives, and access to cheaper green energy have enabled Chinese firms to secure more computing power for less money.
China's AI infrastructure costs less due to abundant land, cheap power, and state support. The "East Data, West Computing" initiative routes power-intensive workloads to inland regions with abundant green energy. Government policy provides cheaper infrastructure, subsidies, fast-tracked approvals, and tax incentives. However, China lags behind in access to leading-edge Nvidia chips and efficiency trade-offs.
China's data centre capacity is growing faster than the US, reducing the relative gap despite the absolute difference widening. Chinese models like Moonshot AI's Kimi K3 and Z.ai's GLM-5.3 now compete with top global rivals. While Chinese hyperscalers generate less cloud revenue than US giants, the gap in AI revenue is beginning to narrow as demand for AI-related products accelerates.
Written by urgent.news from SCMP Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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