China has unveiled ambitious plans to launch space-based artificial intelligence (AI) data centres within the next five years, setting up a direct challenge to Elon Musk’s SpaceX, which also aims to deploy AI data centres in space. The move is part of a broader strategy by China to push the boundaries of space technology and AI infrastructure.

China’s Space Contractor to Build Gigawatt-Class Infrastructure

According to state media, the China Aerospace Science and Technology Corporation (CASC), China’s primary space contractor, is spearheading the effort to build “gigawatt-class space digital-intelligence infrastructure” under its five-year development plan. These new space data centres will integrate cloud, edge, and terminal device capabilities, enabling data from Earth to be processed directly in space.

This initiative is set to revolutionize the way AI computing power is harnessed, potentially shifting the energy-intensive demands of AI processing into space. The new centres are expected to feature significant advances in computing power, storage capacity, and transmission bandwidth, allowing for more efficient and scalable AI operations.

SpaceX’s Space Data Centres and Solar-Powered AI Satellites

SpaceX, founded by Musk, has also outlined plans for space-based AI data centres. Musk recently stated that SpaceX plans to use proceeds from its planned $25 billion IPO to develop solar-powered AI data centre satellites. He highlighted that space-based solar generation could provide five times more power than Earth-based panels, making it an ideal location for AI data processing. SpaceX’s first satellites are expected to be launched in the next two to three years.

The competition between China and the U.S. is intensifying as both countries look to commercialize space-based AI and establish dominance in space. Both nations aim to make space a viable business, much like civil aviation, while also seeking to capitalize on the military and strategic benefits of space dominance.

China’s Long-Term Space Ambitions

China’s broader space ambitions include creating a “Space Cloud” powered by solar energy in orbit, set to become operational by 2030. This initiative is embedded within China’s 15th Five-Year Plan, which outlines the country’s economic development and technological goals. China also plans to expand its space capabilities by focusing on space tourism, including suborbital and orbital operations, over the next five years.

Despite these ambitious plans, China faces significant challenges, including its inability to develop reusable rockets, a key feature of SpaceX’s success. SpaceX’s Falcon 9 reusable rockets have been pivotal in making satellite launches more affordable and have allowed its Starlink network to dominate low Earth orbit (LEO) satellites. China’s progress in reusable rocket technology remains a critical bottleneck for its space ambitions.

China’s Space Industry Gaining Momentum

China’s space industry has made significant progress in recent years, with a record 93 space launches in 2025, aided by its growing commercial spaceflight startups. However, it still lags behind the U.S. in key areas such as reusable rockets and satellite internet infrastructure.

The announcement of the new AI data centre initiative follows the recent inauguration of China’s first School of Interstellar Navigation, housed at the Chinese Academy of Sciences. The school will focus on training the next generation of space talent in areas such as interstellar propulsion and deep space navigation. This marks a significant step in China’s transition from near-Earth orbit operations to deeper space exploration.

U.S.-China Space Race Intensifies

As the U.S. faces growing competition from China in the space sector, particularly in the race to return astronauts to the moon, Beijing is positioning itself as a key player in both commercial and military space operations. With the U.S. moon missions on hold since the Apollo era, China’s long-term goal is to challenge U.S. dominance in space exploration, including deep space initiatives.

The coming decade will likely see an intensification of the U.S.-China space race, with both countries vying for leadership in the emerging space economy.

with inputs from Reuters