China's AI spending set to reach $140 billion by 2025 as compute gap narrows
Moody's reports Chinese firms are increasing AI infrastructure spending significantly while narrowing the capacity divide despite lower US chip leadership.
A new report from Moody's Ratings indicates China is accelerating its artificial intelligence investment, with major tech companies planning capital expenditure of more than US$140 billion this year. This figure represents a substantial increase from the US$65 billion spent in 2025 and is projected to grow further to US$165 billion by 2027. Although US hyperscalers have historically outspent their Chinese rivals, Moody's finds that American computing capacity is not proportionally larger. The disparity has been reduced because lower construction costs, state policy incentives, and access to cheaper green energy allow Chinese firms to acquire more power per dollar spent. While the United States maintains a lead in cutting-edge semiconductor chips, the physical gap between US and Chinese computing power is much narrower than headline spending figures suggest. The report argues that total capex numbers do not fully capture the reality of the global compute race.
