China is laying the groundwork for a new layer of AI infrastructure beyond Earth’s atmosphere, a move that places it in direct competition with U.S. commercial space ambitions.
State broadcaster CCTV reported that China Aerospace Science and Technology Corporation (CASC), the country’s primary space contractor, plans to develop gigawatt-scale, space-based AI data centers over the next five years. The initiative is designed to shift some of the growing energy burden of advanced computing off the planet and into orbit, where solar power is abundant and cooling is less constrained.
On the other hand, analysts note that space-based data centers also introduce new risks, including radiation exposure, space debris and the difficulty of repairing hardware in orbit. Yet the potential gains are so great that vast investment is now focused on establishing AI infrastructure in Earth’s near orbit.
Space Cloud
Under CASC’s plan, the orbital facilities would integrate computing, storage and communications into a single system capable of processing data in space rather than transmitting everything back to Earth. Chinese policymakers have described the concept as a future Space Cloud, positioning it as foundational infrastructure for the country’s long-term AI ambitions.
The proposal aligns closely with China’s upcoming 15th Five-Year Plan, which is widely expected to elevate AI to a central pillar of national development. The CASC frames space-based solar power and AI computing as mutually reinforcing technologies, capable of supporting industrial-scale workloads by the end of the decade.
China has already begun experimenting with orbital computing. In May 2025, Zhejiang Lab launched a small cluster of low Earth orbit satellites as the first phase of a much larger computing constellation. The research institute ultimately aims to deploy thousands of satellites, suggesting that Beijing sees space-based AI computing as an achievable extension of existing space programs.
Competition with Elon Musk’s SpaceX
These plans place China in more explicit competition with SpaceX, which has touted its grand vision for AI data centers in orbit. Speaking at the recent World Economic Forum in Davos, Elon Musk said his company intends to launch solar-powered AI data center satellites within the next two to three years, arguing that energy generation in orbit can far exceed what is possible on the ground.
Musk has suggested that moving energy-hungry AI workloads into space could become economically inevitable as earth-based power grids strain under rising demand. SpaceX is widely expected to use proceeds from a planned IPO to support this effort.
Big Hurdles
Despite its ambitions, China faces practical hurdles. A key advantage for SpaceX has been its mastery of reusable launch technology, particularly the Falcon 9, which has greatly reduced launch costs and enabled rapid satellite deployment. China has yet to complete a fully successful reusable rocket test, a gap that adds to its program’s costs.
China carried out a record number of launches last year, perhaps inspired by the fast-growing commercial space sector. The broader vision was reinforced recently with the launch of a new School of Interstellar Navigation under the Chinese Academy of Sciences. The institution is intended to cultivate expertise in deep-space propulsion and navigation, signaling that China is preparing for a longer term shift toward space exploration.
