Beijing wants state firms to operate the hubs and source at least 80% of technology, including AI chips, from local suppliers — locking out Nvidia and AMD
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A plan now taking shape in Beijing would direct roughly 2 trillion yuan ($295 billion) toward building out AI data centers nationwide over the next five years, with domestic suppliers expected to provide the majority of the technology involved, according to Bloomberg.
The effort is being led by senior agencies such as the National Development and Reform Commission, which are working on plans to link computing facilities into an integrated national network, citing people with knowledge of the discussions. Under the arrangement being considered, China Mobile and China Telecom would take on primary responsibility for running the facilities and maintaining connectivity between them. At least 80% of the hardware and software — AI chips included — would need to come from Chinese vendors such as Huawei Technologies, a threshold that would leave Nvidia $NVDA and Advanced Micro Devices with little room to participate.
Sovereign debt instruments — among them ultra-long-term special government bonds — along with state-backed industry funds are expected to shoulder most of the financial burden, while commercial loans and private investment would fill in the remainder. The blueprint remains in early discussions and details could change.
By 2028, the initiative aims to have disparate data facilities linked into a single coherent system. When electricity grid upgrades are folded into the broader project alongside the computing and communications components, the overall price tag could climb to 5 trillion yuan or more.
Private-sector outlays from companies like Alibaba and Tencent fall outside the 2-trillion yuan estimate, which reflects only publicly funded construction. To put the scale in perspective, American tech giants such as Meta $META Platforms and Microsoft $MSFT have collectively earmarked more than $700 billion for AI spending in 2026 alone.
The plan is a component of China's "Six Networks" program, a broader infrastructure initiative announced earlier this year. It also builds on China's latest five-year plan, which runs through 2030 and pledges to prioritize data infrastructure construction.
Beijing has been moving to reduce its dependence on foreign chips in state-funded projects. The Chinese government told AI companies they must seek government approval before accepting U.S. capital, part of a broader effort to keep American involvement out of strategically sensitive technology sectors. Reuters previously reported that Beijing issued guidance requiring new state-funded data center projects to use only domestically made AI chips.
A Chinese technology-security agency cleared nine domestically produced chip designs last month — products from Huawei, Alibaba, Shanghai Biren Technology, and Moore Threads Technology among them — a certification that allows those chips to be deployed more broadly in sensitive applications.
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