China’s Tech Giants Race To Close AI Capex Gap With US Rivals — ByteDance’s Post-TikTok Pivot Is The Latest Signal

China’s AI industry is already expanding and appears set for continued rapid growth.

• ByteDance is reportedly planning to spend $23 billion next year, mainly on AI infrastructure.
• The plans underscore how the Chinese tech industry is aggressively investing in AI and competing with the U.S. in the emerging field.
• Alibaba, Baidu, and Chinese semiconductor companies have had a strong run this year, driven by AI advancements.

Fresh off a successful divestiture of TikTok’s U.S. operations, ByteDance is now planning to scale aggressively. 

The Chinese tech giant – one of the world’s most valued private companies – plans to spend 160 billion yuan ($22.7 billion) on capital expenditure next year, mainly towards artificial intelligence (AI) infrastructure, Financial Times reported on Monday. That’s up from 150 billion yuan in 2025.

Together with Alibaba’s $53 billion AI spending pledge – which CEO Eddie Wu has said could rise further – and the rapid pace of rollouts, China’s AI industry is already expanding and appears set for continued rapid growth.

Although the capital spending of Chinese tech giants is well below that of American heavyweights such as Amazon and Google, the gap in AI advancement is diminishing.

Earlier in the year, Chinese startup DeepSeek stunned the market by producing benchmark AI models at a fraction of the cost of those from OpenAI. Around the same time, Alibaba launched an aggressive AI plan, which later saw the release of several iterations of its Qwen AI technology and a ChatGPT-like Qwen AI app, which would be rolled out globally next year. 

AI development strengthened Alibaba’s cloud business and lifted the company’s stock, reviving interest in the Chinese tech sector and drawing renewed attention from global investors. BABA is up about 80% year-to-date and is on track to record its second-best annual gain since its 2014 listing.

The momentum has trickled into AI-adjoining industries, such as semiconductors. Stocktwits reported earlier this month that Chinese chip makers, too, had a strong year. Companies such as Cambricon Technologies, viewed as a key challenger to Nvidia, and long-established Hua Hong Semiconductor, have logged strong share gains, while new chipmaker IPOs – most notably Moore Threads – have delivered standout performances.

As Chinese tech advanced, concerns about an AI bubble began to emerge in the U.S. That led to a sharp sell-off in the market last month, driven by AI-linked tech stocks, even though the market later rebounded to a record high. In a recent, detailed report on the state of AI, Morgan Stanley noted the growing influence of China in the emerging field.

The investment bank dismissed concerns about an AI bubble. “We believe this potent technology will disrupt labor markets and boost productivity globally while creating value across public and private markets. Yes, tech stocks keep driving market gains, but no, we do not see a bubble about to burst.”

So far this year, BABA and BIDU have risen 80.3% and 50%, respectively. In comparison, GOOGL is up 62.5%, while MSFT and AMZN have increased 14% and 3%, respectively. 

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