China's $98B AI Push Spurs Global Competition & Innovation

China’s projected $98 billion investment in artificial intelligence (AI) for 2025 marks a strategic leap in its long-term vision to lead the global AI race. Launched under the 2017 New Generation AI Development Plan, the initiative targets a $150 billion AI industry by 2030, with government funding expected to contribute up to $56 billion—a massive jump from the few billion allocated in earlier years.

This surge supports China’s goal of full AI self-sufficiency by 2030 and reflects a hybrid model of state-directed development and private sector innovation. Key players like Alibaba and Tencent are expected to contribute $24 billion, showcasing a robust public-private partnership approach.

Key Highlights

• China to invest $98B in AI by 2025, with $56B from the government
• DeepSeek’s $5.6M model challenges big-budget AI norms
• AI growth could add up to 0.3% to China’s GDP by 2030

A pivotal development is DeepSeek, a Hangzhou-based startup that built its R1 AI model at just $5.6 million, a fraction of what U.S. models typically cost. Despite limited spending, the model achieved comparable performance—challenging assumptions that AI innovation requires massive capital. This low-cost efficiency has attracted both government attention and tech giant investment, highlighting a shift in global AI dynamics.

With over 800 million internet users, China’s vast data access gives it an unmatched edge in training AI systems. Even amid U.S. chip export restrictions, Chinese developers are focusing on computational efficiency rather than raw processing power, sustaining momentum.

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Goldman Sachs projects this AI push could add 0.2–0.3 percent to China’s GDP by 2030, emphasizing the sector’s economic potential. China's model—top-down policy paired with agile startups—presents a compelling alternative to Western AI strategies.