AI Enhances China's Cloud Computing Landscape

China's cloud computing sector is set to experience significant growth, particularly following the emergence of the AI startup DeepSeek. This company has demonstrated that extensive computing resources are not necessarily a prerequisite for achieving breakthroughs in artificial intelligence.

Experts believe that as AI technology becomes more advanced and widespread, cloud computing services will become simpler and more efficient for users. This will lead to an expansion of usage scenarios, with businesses increasingly integrating cloud computing and generative AI solutions. The race for advancements in AI chatbots on a global scale will likely intensify.

Top cloud computing firms in China, such as Alibaba Cloud, Baidu AI Cloud, Tencent Cloud, and Huawei Cloud, have already incorporated DeepSeek's innovative AI models into their platforms. DeepSeek has gained attention worldwide for developing an open-source large language model at a fraction of the cost and computational power needed by international counterparts.

Alibaba Cloud announced that DeepSeek's AI model is now accessible on its platform, allowing users to conduct the entire process from model training to deployment and inference without any coding required. This development streamlines the model development process, offering both developers and enterprise users a quicker and more effective way to develop and apply AI.

Charlie Dai, vice-president and principal analyst at Forrester, indicated that DeepSeek is reshaping the landscape of cloud computing and AI in China. Its impact is notable in accelerating AI model training, enhancing reasoning capabilities, and fostering broader enterprise adoption of AI technologies.

Dai emphasized that significant cloud service providers in China must leverage DeepSeek's popularity by embedding its capabilities within their offerings. They can enhance customer experiences and operational efficiency by focusing on scalable cloud infrastructures that support AI workloads centered around the DeepSeek model.

Moreover, ensuring the security of data and adherence to regulations is essential to safeguard sensitive information. Pan Helin, a member of the Ministry of Industry and Information Technology's Expert Committee for Information and Communication Economy, highlighted that DeepSeek's arrival has drastically reduced computing costs while improving the utilization of resources. This shift signals a transformation in the global cloud computing landscape and upgrades cloud services.

Cloud computing is not only vital for supporting extensive research and development of AI but also accelerates the iteration and deployment of AI models, ensuring robust computing power for the swift advancement of AI technology.

According to data from Canalys, spending on cloud infrastructure services in mainland China reached $10.2 billion in the third quarter of 2024, marking an 11 percent increase compared to the previous year and indicating a rebound into double-digit growth.

AI is becoming a key driver of cloud adoption, as more companies embed AI capabilities into cloud applications to enhance functionality and improve operational efficiency. In terms of market share, Alibaba Cloud leads with a 36 percent share and a 7 percent increase year-on-year in the third quarter, primarily due to its public cloud offerings, followed by Huawei Cloud and Tencent Cloud.

Zou Debao, deputy general manager of AI industry research at CCID Consulting, noted that DeepSeek's rapid rise has transformed the domestic cloud computing landscape. Previously, larger cloud companies held dominant positions due to their robust computing power and technological expertise. However, smaller providers can now quickly enhance their services and attract new clients through partnerships with DeepSeek.

To stay competitive, Chinese cloud service providers are increasing their capital investments to boost computing power, scalability, and efficiency. According to Canalys analyst Zhang Yi, these investments are essential for securing a strong position in strategic sectors, enabling them to remain leaders in technological innovation and market competitiveness in an AI-driven environment.

AI, Cloud, Computing, DeepSeek, Alibaba