China AI model and cloud market Report Interpretation

Overview

This monthly China AI Model Monitor links model capability, developer usage, token economics, cloud investment and enterprise monetization. The report argues that rapid model upgrades and strong adoption of cost-effective Chinese models are supporting a multi-year expansion in AI cloud, especially MaaS and AI infrastructure.

Core views

The report first describes an increasingly competitive China AI-model market. Cloud incumbents continued rapid upgrades, including Tencent Hy4 preview and Alibaba Qwen 3.8 Max/Flash, while independent labs also introduced models such as Zhipu GLM-5.3 Flash. BofA notes that some providers, including DeepSeek, raised token prices in August; it attributes this more to tight available compute than to a shift away from the high-performance, low-cost strategy. At the same time, launches of lower-priced smaller models broadened the range of cost-effective options. Usage data points to strong developer adoption of Chinese open models. On OpenRouter, DeepSeek V4 Flash 0731 led August month-to-date usage at 31.6tn tokens as of August 17, ahead of Tencent Hy3 at 26.2tn and Xiaomi MiMo-V2.5 at 19.1tn. In the week of August 17, DeepSeek led provider token volume at 20.3tn tokens and held 22% of top-50-model volume, up 4.7 percentage points from the comparable July week. OpenCode data similarly showed DeepSeek dominating after the late-July V4 Flash launch, while Ox-alpha, reported to be Z.ai’s GLM-5.3 Flash, rose sharply after its late-August launch. On Vercel AI Gateway, DeepSeek’s average month-to-date token share rose to 29.7% from 26.0% in July, while Anthropic’s fell to 24.7% from 30.1%; OpenAI gained to 16.3% from 12.3%. BofA stresses that OpenRouter, OpenCode and Vercel only capture traffic routed through those platforms, not direct provider APIs, private deployments, self-hosted inference or hyperscaler internal workloads. Capability rankings show Chinese frontier models closing part of the gap with global leaders. Artificial Analysis ranked Claude Opus 5 highest on its Intelligence Index at 63, followed by Claude Fable 5 at 62 and GPT-5.6 Sol at 61; Kimi K3 and Zhipu GLM-5.3 were fifth and sixth, respectively, at 60. In Code Arena WebDev, Claude Opus 5 led at 1,691, followed by Kimi K3 at 1,674 and Qwen-3.8 Max at 1,669; Tencent Hy4 preview ranked sixth at 1,633. The report also highlights the cost advantage of Chinese models: Claude Opus 5 was priced at US$5 per million input tokens and US$25 per million output tokens, versus Kimi K3 at US$3 and US$15 and Qwen-3.8 Max at US$2 and US$6. The Silicon Data LLM Token Expenditure Index declined 26% month-on-month to US$1.07 in August from US$1.45 in July, although BofA characterizes the level as stabilizing. The investment and monetization thread is the report’s central upside case. Listed Chinese cloud incumbents increased spending sharply in 2Q26, with Tencent capex at RMB53bn and Alibaba at RMB68bn; cloud revenue grew in the low-20% YoY range for Tencent and 45% YoY for Alibaba. BofA forecasts the top four China cloud platforms’ combined capex to rise 98% YoY in 2026E and 44% in 2027E, while forward-12-month consensus capex for Tencent and Alibaba rose 25% and 29%, respectively, over the prior 30 days. It expects combined capex of the leading four spenders to reach RMB726bn in 2026E and RMB1.0tn in 2027E, following nearly RMB400bn in 2025. BofA expects cloud to remain China enterprise AI’s most visible revenue model because training and inference require compute while models can be monetized through APIs. It forecasts the total China cloud market to grow from RMB389bn in 2025 to RMB1,729bn in 2030E. AI cloud is projected to rise from RMB66bn to RMB1,146bn over the same period, increasing from 17% to 66% of total cloud. MaaS is forecast to grow from RMB21bn to RMB676bn and AI infrastructure cloud from RMB45bn to RMB470bn; incumbents with large cloud operations, particularly Alibaba, Tencent and ByteDance, are expected to capture much of incremental growth. Independent AI labs are projected to grow faster from a smaller base and through greater international exposure. Non-AI cloud remains the largest base revenue pool but is expected to grow more moderately, from RMB323bn in 2025 to RMB583bn in 2030E. The monitor also tracks consumer adoption. ByteDance’s Doubao reached weekly DAU of 171.3mn and total weekly time spent of 11.5bn minutes in the week of August 3, ahead of DeepSeek at 30.7mn DAU and 3.8bn minutes, Qwen at 28.0mn and 752mn minutes, and Yuanbao at 8.7mn and 695mn minutes. Per-user engagement was mixed: Doubao’s daily time spent and sessions per user fell notably in June and July, while DeepSeek’s edged up to 18 minutes and eight sessions per user in the week of August 3.

Analysis framework

BofA combines model-release tracking with benchmark rankings, routed token-usage data, normalized spend and pricing measures, company capex and cloud-revenue observations, and a bottom-up China cloud market forecast through 2030E. It distinguishes model capability from adoption and emphasizes the coverage limits of platform-routed usage data.

Methodology notes

• Industry AnalysisSupply-demand framework

  AI cloud demand and infrastructure investment framework

  The report connects rising training and inference demand, model usage and API adoption with cloud-provider capex and projected AI-cloud revenue growth.

• Industry AnalysisVolume-price decomposition

  Token usage, token pricing and cost-per-task comparison

  The report compares token volumes and shares with list prices, an expenditure index and capability-adjusted task costs to assess adoption and cost-performance.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Alibaba

  Major China cloud incumbent expected to benefit from AI-driven enterprise spending and incremental MaaS growth.

  Strengths

  Large cloud operation; 2Q cloud revenue grew 45% YoY; forward-12-month capex consensus rose 29% in the prior 30 days.

  Comparison

  Expected to be among the incumbent platforms capturing incremental AI-cloud growth.

• Tencent

  Major China cloud incumbent expected to benefit from AI-driven enterprise spending and incremental MaaS growth.

  Strengths

  RMB53bn 2Q26 capex; cloud revenue grew in the low-20% YoY range; forward-12-month capex consensus rose 25% in the prior 30 days.

  Comparison

  Expected to be among the incumbent platforms capturing incremental AI-cloud growth.

• ByteDance / Volcano Engine

  Major cloud and AI platform expected to participate in AI-cloud growth; Doubao leads tracked consumer AI-app usage.

  Strengths

  Doubao reached 171.3mn weekly DAU and 11.5bn weekly minutes in the week of August 3.

  Weaknesses

  Doubao per-user daily time spent and sessions declined notably in June and July.

  Comparison

  BofA forecasts ByteDance/Volcano Engine cloud revenue to grow faster than several large incumbents from a smaller base.

• Zhipu

  Independent AI lab expected to grow rapidly from a small base and through international-market presence.

  Strengths

  GLM-5.3 ranked 60 on the Artificial Analysis Intelligence Index and tied for the highest Agentic Index score at 59.

  Comparison

  BofA projects faster growth for independent labs than incumbents, but incumbents capture much of incremental MaaS growth.

Key data

• DeepSeek V4 Flash OpenRouter usage31.6tn tokens MTDLed tracked models as of August 17, ahead of Tencent Hy3 at 26.2tn.
• DeepSeek OpenRouter volume share22%Top-50-model provider share in the week of August 17; up 4.7 percentage points versus the comparable July week.
• DeepSeek Vercel token share29.7%Average August MTD share, versus 26.0% in July.
• LLM Token Expenditure IndexUS$1.07Down 26% month-on-month from US$1.45 in July, as of August 26.
• Top-four China cloud-platform capex growth98% YoY in 2026E; 44% YoY in 2027EBofA forecast for combined capex.
• China total cloud marketRMB389bn in 2025 to RMB1,729bn in 2030EBofA forecast; 38% CAGR for 2026-30.
• China AI MaaS marketRMB21bn in 2025 to RMB676bn in 2030EForecast to be the fastest-growing AI-cloud subsegment.
• China AI infrastructure cloud marketRMB45bn in 2025 to RMB470bn in 2030EDriven by GPU compute, training, inference and AI platform services.

Impact & implications

The report sees model upgrades, lower-cost open-model adoption and escalating infrastructure spend as mutually reinforcing. It expects AI MaaS and AI infrastructure to shift China cloud growth increasingly toward AI-related services, with major cloud incumbents positioned to capture much of the incremental revenue.

What to watch

• Zhipu’s 1H26 results on August 31 and potential GLM5.5 launch in 2H26.
• Potential Alibaba model upgrade around the Alibaba Cloud Summit on September 22-24.
• Potential MiniMax M3.1/M3 Pro, DeepSeek V5 and Tencent Hy4 official or Hy5 preview launches.
• The January 2027 lock-up expiries for Zhipu and MiniMax.