China to spend 2 trillion yuan on AI data center network

China is preparing to launch a massive state-backed initiative to build a nationwide network of artificial intelligence data centers, with plans to spend approximately 2 trillion yuan ($295 billion) over the next five years. The blueprint, currently being drafted by key agencies including the National Development and Reform Commission, aims to create an interconnected computing grid to bolster domestic AI capabilities and sharply reduce reliance on foreign technology.

The plan calls for state-owned telecommunications giants China Mobile and China Telecom to operate much of the new infrastructure. A central requirement is that at least 80 percent of the core technology, including AI processors and supporting hardware, must be sourced from domestic suppliers such as Huawei. This directive is designed to sideline American chipmakers Nvidia and AMD, whose most advanced products have faced increasing U.S. export restrictions.

Funding for the ambitious buildout is expected to come from multiple sources, including sovereign debt, state-backed investment vehicles, bank financing, and potential private capital from major Chinese technology firms. The initiative forms a key part of a...