China's key ministries announced on Monday their plans to increase the country's computing power by 50% by 2025. This move comes as China strives to keep up with the United States in the fields of artificial intelligence and supercomputing applications. According to a plan developed by six government departments, including the influential cyberspace regulator, the world's second-largest economy aims to achieve a computing capacity of 300 exaflops. Currently, China's computing power stands at 197 exaflops. To put this into context, one exaflop is equivalent to the computing power of two million mainstream laptops, as per Counterpoint Research. The Chinese ministries emphasized that the enhanced computing power will be crucial in supporting various industries, including finance and education. Expanding computing power is seen as a vital requirement for the development of artificial intelligence, which heavily relies on advanced semiconductors to analyze vast amounts of data. Akshara Bassi, a senior research analyst at Counterpoint, noted that China has discovered that each yuan invested in computing power yields 3-4 yuan of economic output. This investment aligns with China's strategy to drive economic growth through technology leadership and integration of artificial intelligence across all industries. Semiconductors and AI have become key areas of competition in the ongoing tech rivalry between the US and China.

Bassi added that China aims to boost its computing power, particularly in the field of AI. Chinese cloud providers are launching AI solutions on a large scale, targeting both consumers and enterprises. As part of its computing push, China will focus on areas like memory storage and data transmission networks, as well as construct more data centers to support the growth of cloud computing services. Many AI applications heavily rely on cloud computing, with major Chinese companies like Alibaba and Tencent offering such solutions. The Chinese ministries also emphasized the need to strengthen supply chain security as a response to the challenges faced due to US export controls and sanctions. Over the past few years, the US has sought to restrict China's access to crucial technologies like chips. In response, China has aimed to enhance its domestic industries in these areas. China's recent release of a new smartphone equipped with a 5G chip by Huawei, despite US sanctions, garnered attention from Washington. Bassi mentioned that US sanctions, such as the ban on critical semiconductors like graphics processing units (GPUs) from American chip designer Nvidia, may pose a challenge to China's ambition of boosting computing power. The limited access to the latest and best AI chips/GPUs is a primary obstacle that China faces in expanding its AI data centers.