China’s spending on cloud infrastructure services hit US$11.6 billion in Q1 2025, a 16% year-on-year increase, according to Canalys.

The growth is driven by rising demand from AI-related activities.

Alibaba leads with a 33% market share and 15% revenue growth. Huawei follows at 18% share with 18% growth.

Tencent holds 10% but saw limited revenue growth due to GPU supply constraints prioritized for internal use.

Demand for cloud resources continues to grow despite US export restrictions on advanced chips.

Businesses are increasingly relying on cloud-based GPU resources to meet AI model needs.

Major providers like Alibaba, Huawei, and Tencent plan to expand infrastructure to meet market demand.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ China’s cloud market has matured dramatically in market size and competitive dynamics

China’s cloud infrastructure spending has undergone remarkable growth, from generating approximately $4 billion in 2014 (representing just 5% of China’s IT industry) to reaching $11.6 billion in a single quarter in 2025 1.

The competitive landscape has shifted significantly, with Alibaba’s market dominance decreasing from 42% in 2018 to 33% in 2025, indicating increasing competition in a maturing market 2.

This transformation reflects the broader trend of cloud computing becoming central to China’s digital economy, with total annual spending projected to reach $46 billion this year according to the original article.

The growing importance of partner-driven revenue (25% of the market in Q1 2025) demonstrates how the ecosystem is evolving beyond direct cloud provision to include more complex service delivery models and partnerships.

2️⃣ U.S. export controls have shaped but not derailed China’s AI cloud growth

Despite U.S. semiconductor export controls aimed at limiting China’s AI capabilities, Chinese cloud providers have continued to show strong growth through alternative sourcing methods and strategic adaptations 3.

Recent Alibaba developments