China’s cloud market is expanding quickly, and AI is a big reason behind it. Spending on cloud infrastructure reached $14.7 billion in the last quarter of 2025, up 26% from a year earlier, according to Omdia.
What’s driving this growth is the wider use of AI models across businesses. As companies adopt these systems, they also need more cloud capacity to run them. New developments like agent-based tools are also changing how AI is used—making it easier to connect workflows, software tools, and external systems in a more practical, business-friendly way.
China’s major cloud players are now refining their focus. Alibaba Cloud is leaning more into enterprise platforms, while Tencent Cloud is putting attention on the inference side of AI. At the same time, Huawei Cloud is pushing AI adoption across industries by combining models, platforms, and real-world applications.
Alibaba Cloud continues to lead the market with a 37% share. It has strengthened its position by launching an enterprise-focused AI agent platform called Wukong, along with a newer Qwen3.5 model. The company is also expanding globally, including opening another data centre in Japan.
Huawei Cloud remains in second place with a 17% share. It has been building industry-specific AI solutions, including tools for healthcare, and has introduced a funding program to support its AI ecosystem. Its AI coding assistant has also seen strong growth in users after its public release.
Tencent Cloud, with about 10% market share, is also upgrading its AI platforms and looking to grow internationally, with plans to expand its presence in Europe.
A separate report from Mordor Intelligence shows that large enterprises—like banks, telecom firms, and manufacturers—make up nearly 60% of cloud spending in China. While big companies such as Alibaba and Tencent run their AI models on their own infrastructure, smaller AI startups often depend on these cloud platforms instead of building everything from scratch.
For example, models from companies like DeepSeek are available across multiple cloud providers, including Alibaba Cloud and Huawei Cloud. Others, like Kimi, run their workloads mainly on Alibaba’s infrastructure.
Looking ahead, the market is expected to keep growing at a similar pace, with Omdia forecasting another 26% increase in 2026. Partnerships are likely to play a bigger role, as a significant portion of revenue already comes through collaborations.
This kind of collaboration is already visible. Reports suggest Alibaba Group and Tencent Holdings are in talks to invest in AI startup DeepSeek, in a deal that could value the company at over $20 billion. At the same time, DeepSeek has been working with Huawei to optimise its models for Huawei’s hardware, making deployment across its AI systems more efficient.
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