Canalys: Cloud services spending in mainland China reached $10.2 billion in Q3, with a year-on-year growth of 11%.

Canalys stated in a report that in the third quarter of 2024, China's mainland spending on cloud infrastructure services reached $10.2 billion, an 11% year-on-year growth, returning to double-digit growth. AI is gradually becoming an important driver for cloud computing adoption, with more and more companies embedding AI functionalities into cloud-based applications to enhance intelligence levels and simplify operational efficiency. For example, AI intelligent recommendations and automated operation scenarios are being more widely adopted in various industries. In the third quarter of 2024, the top three cloud service providers in China remained unchanged, with Alibaba Cloud, Huawei Cloud, and Tencent Cloud continuing to dominate the market, collectively holding a 70% market share. Meanwhile, operators led by China Telecom Corporation (00728) are also seeking differentiation points to expand their market share in cloud services, especially in industry-specific solutions and localized services. In the third quarter of 2024, partner-driven cloud revenue remained stable, accounting for 26% of total market revenue. With the continuous expansion of the AI ecosystem, this proportion is expected to increase to meet the growing demand in various industries for integrated solutions and collaboration. In the third quarter of 2024, China's leading cloud computing providers followed the global trend by significantly increasing their investments in AI infrastructure and high-performance computing. These measures reflect a strategic response to the escalating demand for training and real-time inference of large-scale artificial intelligence models, driven by generative AI and other cutting-edge applications. Canalys analyst Zhang Yi stated that Alibaba Cloud and Tencent Cloud are further increasing capital expenditures to enhance computing power, scalability, and efficiency. These investments aim to consolidate their position in key strategic areas, ensuring they maintain technological innovation and competitive advantages in an increasingly AI-driven market. The unique characteristics of the market environment have influenced China's strategy in AI investments. Compared to the massive and high-intensity investments of American cloud giants, Chinese cloud service providers have adopted a more stable and balanced investment approach. This reflects the current status of AI applications in China, which are still in the exploratory stage, with overall computing demand not yet fully unleashed. Additionally, the relatively small market size and computing demand of Chinese AI startups also prompt a more cautious pace of market expansion. Therefore, while China's AI services continue to grow, its short-term expansion is expected to remain stable and gradual. Alibaba Cloud continues to maintain its leading position in the Chinese cloud market, holding a 36% market share, with a 7% year-on-year growth in the third quarter, mainly driven by its public cloud business. Its AI-related products have maintained triple-digit revenue growth for five consecutive quarters, further solidifying its leadership in the public cloud sector. Over 300,000 enterprise customers are using Alibaba Cloud's AI-based model "Tongyi Qian Wen" to improve operational efficiency. At the Paris Olympics in July 2024, Alibaba Cloud showcased its technological strength by delivering real-time signals from Paris to audiences in over 200 countries and regions through AI-enhanced broadcasting technology. Looking ahead, Alibaba Cloud announced a significant increase in short-term investments in AI-related infrastructure to meet the growing demand for cloud computing and API services required for AI model deployment. Huawei Cloud maintained its second position in the Chinese cloud service market, achieving a steady growth of 13% in the third quarter, with a market share of 19%. Huawei Cloud has made significant progress in AI development, with its solutions covering over 30 industries and 400 business scenarios. Building on this momentum, Huawei Cloud upgraded the initially launched Panggu 5.0 model in September 2024 and introduced the "1+N" Panggu Assistant System to meet the needs of customers in high-frequency business scenarios. To further support innovation, Huawei Cloud launched the "AI Entrepreneurship Empowerment Program," providing up to 1.2 million RMB (approximately $165,000) in Ascending Cloud computing power for AI startups, further enhancing its ecosystem development and technological leadership. Tencent Cloud ranked third in the market, with a market share of 15% in the third quarter. The sharp increase in AI demand has greatly boosted its GPU-related revenue, which now accounts for over 10% of its IaaS revenue. Tencent Cloud's AI-related solutions are widely adopted, serving over 400 leading internet companies. In September of this year, Tencent Cloud launched the "Hunyuan Turbo" AI model, which has increased inference efficiency by 100% compared to the previous generation, reduced deployment costs by 50%, and improved decoding speed by 20%. To further strengthen its infrastructure, Tencent Cloud announced an investment of 3.6 billion RMB (approximately $500 million) to build its third data center in Indonesia, scheduled for completion by 2030.