Cloud infrastructure spending in Mainland China reached US$11.6 billion in the first quarter of 2025, marking a 16% year-over-year increase, according to the latest figures from Canalys, now part of Omdia. This growth highlights the continued momentum of artificial intelligence (AI) adoption as a major force shaping the cloud computing landscape across the region.
As AI workloads become increasingly central to digital transformation efforts, cloud service providers in China are scaling investments in infrastructure and foundational model development. The rising reliance on GPU-based cloud infrastructure to support AI operations is changing enterprise IT strategies, driving migration from traditional on-premises data centers to more agile and scalable cloud platforms.
Major providers are taking diverse strategic steps to bridge the gap between advanced model capabilities and enterprise application needs. These include the open-sourcing of proprietary AI models, launching turnkey agent platforms, and expanding partnership ecosystems. The goal is to speed up AI integration in business operations while creating broader market readiness for emerging technologies.
According to Omdia’s Enterprise AI Contracts Database, a growing number of enterprise customers are entering agreements with cloud providers to deploy pre-trained models and access managed AI services. These turnkey solutions enable faster implementation, helping businesses accelerate time-to-value.
Tencent Cloud, Huawei Cloud, Alibaba Cloud
Alibaba Cloud remains the leading cloud service provider in Mainland China, with a 33% market share in Q1 2025 and a 15% year-over-year growth rate. AI-related workloads have driven its performance, showing triple-digit growth for seven consecutive quarters. In April, Alibaba Cloud released its Qwen3 hybrid inference model series, with all eight models open-sourced to foster ecosystem development. The company also launched international expansion initiatives, including conferences for Chinese enterprises, a new AI Capability Center in Singapore, and additional data centers in Malaysia and the Philippines.
Huawei Cloud held 18% of the market, according to Canalys, achieving 18% revenue growth compared to the same period last year. The company announced major updates in June, including the launch of Pangu 5.5, a foundation model suite optimized for scientific computing, multimodal learning, natural language processing, computer vision, and predictive analytics. Inference efficiency for the model suite increased eightfold. Huawei also introduced ModelArts Versatile, a scenario-based agent platform designed to streamline AI application development. To support its growing ecosystem, Huawei launched a US$21 million incentive program and reported strong performance in its cloud marketplace, KooGallery.
Tencent Cloud held 10% of the market in Q1 2025. Although internal prioritization and GPU supply constraints limited growth, the company continued developing its Hunyuan AI model family, updating Turbo S and T1. Turbo S achieved a top-10 ranking globally on the Chatbot Arena benchmark. Tencent also launched the Tencent Cloud Agent Development Platform (TCADP) to simplify the creation of intelligent agents. This new tool allows integration with both internal and external high-performance models and aims to support AI innovation across the Asia-Pacific region. Tencent bolstered its international presence with the launch of a new cloud region and third availability zone in Japan.
The broader industry trend shows cloud providers responding to demand for AI with adaptive business models. Model open-sourcing and AI agent deployment platforms are now central strategies, enabling service providers to deliver enterprise-ready solutions. These approaches also foster deeper ecosystem engagement, as partner-driven revenue exceeded 25% of the market in Q1 2025.
Omdia notes that cloud infrastructure services encompass a range of offerings – including infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), container-as-a-service (CaaS), bare metal as a service (BMaaS), and serverless computing – hosted by third-party providers and delivered over the internet. The expansion of these services continues to be shaped by AI as organizations across Mainland China seek to future-proof operations and scale innovations.
As foundational models evolve and cloud capabilities expand, providers in China are positioning themselves not only to serve local enterprises but also to compete globally. With ongoing investments in international data centers, AI R&D, and ecosystem development, China’s cloud leaders are poised to shape the next phase of AI-driven digital infrastructure.
