Chinese AI Giants Narrow the Gap with US Rivals at Lower Costs
According to a Moody's report, Chinese artificial intelligence companies are narrowing the computing capacity gap with their US rivals while spending less, thanks to domestic cost advantages and government support.
According to a Moody's Ratings report, Chinese artificial intelligence companies are extracting much more computing power per dollar spent due to lower domestic costs and government support.
Investment and Computing Capacity Gap
Although the gap in AI spending between US and Chinese tech giants is massive, this does not reflect the physical capacity gap between the two sides to the same extent. According to the Moody's report, Chinese firms stand out in this regard thanks to cost advantages.
Capital Expenditures and Projections
Capital expenditures by major Chinese tech companies are projected to rise to $140 billion this year—more than double the $65 billion level in 2025—and reach $165 billion by 2027. Meanwhile, the total spending of the top five US cloud providers and companies like CoreWeave is seen to be much higher.
Cost Advantage and Government Support
China's cost advantage stems from land, energy, and structural government support. Thanks to initiatives managed by Beijing, energy-intensive workloads are being directed to resource-rich inland regions such as Inner Mongolia and Gansu.
Data Center Capacities
According to International Energy Agency data, as of the end of 2025, installed data center capacity stood at 52 gigawatts in the US and 28 gigawatts in China. By 2030, US capacity is projected to reach 100 gigawatts and China's 67 gigawatts.
Global Success of Models and Revenue Path
Leading Chinese AI models achieve rankings comparable to their global open-weight rivals. In contrast, US companies possess larger enterprise customer bases and clearer revenue pathways.