Where does China's AI development funding come from?
This video analyzes the massive revenue gap between US and Chinese AI companies, as well as the differences in the sources of funding for AI development in both countries. AI development in the United States primarily relies on tech giants' cash flows and capital market financing. In contrast, the enormous funding for Chinese AI and computing power infrastructure mainly comes from underlying support such as national fiscal expenditures, tax exemptions, and direct investments from national big funds—ultimately originating from taxpayers and state-owned funds.
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OpenAI's annualized revenue has reached nearly $70 billion, while Anthropic's estimated annualized revenue has reached $100 billion. But what about these Chinese AI companies? Zhipu is at $1.6 billion, Kimi at $300 million, DeepSeek at $1 billion, and MiniMax at $800 million. Combined, these two US companies now stand at $170 billion, while the four Chinese companies combined make less than $4 billion—a gap of nearly forty times or more. It is a classic case of critical acclaim without commercial success. Speaking of which, another question arises: whenever we talk about AI, we all know that developing AI requires a lot of computing power and a vast amount of money.
Recently, whenever AI is brought up, we often hear a perspective that there is a huge bubble in AI right now. To develop AI, the total US investment in AI computing power has reached a staggering level. According to estimates by relevant scholars, from 2025 to 2032, the US will dump capital expenditure equivalent to about 3.6% of its GDP annually into AI infrastructure, making it the largest direct capital investment in US history. Setting aside the bubble theory, where does the money come from for the US to sustain such astronomical capital investment to develop AI? In the past, it mainly relied on the cash flows of tech giants like Microsoft, Google, Amazon, and Meta, but starting this year, that is no longer enough.
They have been raising funds from capital markets through massive bond issuances, leasing, and private credit. Overall, however, the money for US AI development is provided by the capital markets—funds willingly invested by capital markets after seeing the revenues of OpenAI and Anthropic. Meanwhile, as China's AI aims to catch up recently, its computing power demands will naturally not be small. Capital expenditure on computing power for Chinese AI is also massive; besides tech giants like Alibaba, Tencent, and ByteDance, whose capital expenditures are soaring this year, the Chinese Communist Party (CCP) is also taking the lead in building various computing power centers.
According to estimates by relevant institutions, China's AI computing power expenditure this year ranges between 900 billion and 1.3 trillion yuan, more than doubling last year's figure. In addition, given that the CCP faces a chip blockade and must develop its own chips, China's AI-related capital expenditures will not fall far behind those of the US. So, who is actually paying for such a vast sum of money? The answer is that it comes from underlying state support.
According to the Ministry of Finance's own estimates, the total expenditure over the four years from 2024 to 2027 stands at 520 billion yuan, averaging 130 billion yuan per year. Furthermore, in areas out of sight, tech enterprises receive tax exemptions; in 2025 alone, tax and fee concessions for technological innovation exceeded two trillion yuan. Beyond that, there are unquantifiable benefits like cheap land for factories, which will not be detailed here. Naturally, besides indirect support, there is also direct funding. For instance, in terms of chips, Phase III of the national fund specifically dedicated to investing in chips alone reached 344 billion yuan; the national artificial intelligence industry investment fund has another 60 billion yuan; the national venture capital guidance fund has 100 billion yuan; and even the National Social Security Fund has contributed tens of billions. So where does this money come from? Ultimately, it is the common people's money, the taxes paid by taxpayers, and the funds of state-owned banks.