China continues to outspend the rest of the world when it comes to cloud infrastructure, according to research from Canalys. Overall, the mainland spent $7.3 billion on infrastructure in Q1 2022 alone and the number is expected to continue to grow over the rest of the year.

Specifically, the country’s four cloud vendor market leaders remain unchanged: Alibaba Cloud, Huawei Cloud, Tencent Cloud, and Baidu AI Cloud.

These four “have benefited from the expansion of cloud use and accounted for 79% of total expenditure in China, an increase of 19% year on year,” the report said.

The latest numbers were down year over year due to the resurgence of COVID-19 and accompanying lockdowns in March 2022, which caused a “temporary” slowdown. Overall, China still holds the top spot and the market is strong, said the analyst firm’s report.

“China continues to be the leading growth market,” the report noted. Deployments are accelerating due to China’s $2.3 trillion New Infrastructure Plan and "due to the increasingly urgent need for the digital transformation of enterprises, cloud service providers are still capturing new opportunities for their infrastructure services." To compare, China's infrastructure plan dwarfs the U.S. $65 billion Bipartisan Infrastructure Law.

While the urgency for enterprises to migrate to the cloud is higher than ever, the difference in service capabilities among the cloud service providers is shrinking, leading to a state of “involution” and accelerating competition, the report stated.

As a result, the top four cloud providers are developing service ecosystems focusing on partners with experience in key verticals to help differentiate themselves from the competition.

“Currently, China’s hyperscalers are rapidly expanding their abilities to provide solutions for specific industry customers,” said Canalys VP Alex Smith. “But they are not doing this alone. Instead, they are growing their bases of specialized ecosystem partners across different vertical industries to achieve both technical and industry-specific problem-solving capabilities.”