China powers global artificial intelligence expansion with reliable supply chains

JINAN — China's impressive export performance in the first quarter reveals that amid the rapid global expansion of artificial intelligence, the country is emerging as a primary and stable supplier in the digital infrastructure supply chain.

While the nation's overall exports climbed 11.9 percent in the first quarter, electromechanical products stood out with a 21.4 percent year-on-year surge. Among the robust sectors were data center-related products — power generation equipment, power grid gear and energy storage systems — which together saw double-digit export growth.

China has become the world's largest exporter of AI-related goods, accounting for roughly 19 percent of the world's total exports in 2025, and these exports remained resilient in the first quarter, growing by 14.7 percent year-on-year, according to a research report released by Standard Chartered earlier this month.

This influence on the global AI supply chain is evident across the country's factory floors, many of which are operating at full tilt.

At its production bases, Weichai Power is ramping up production of large diesel generator sets to meet soaring demand from global data centers. The flagship 5-megawatt high-speed diesel generators of the leading engine manufacturer in eastern China — designed for hyper-scale data centers, industrial backup and emergency grid support — have set a global benchmark for power density.

From its base in Shandong province, a major hub for electromechanical equipment, Weichai is capturing global markets with its innovative products. Exports of diesel motors there in 2025 saw robust growth, led by strong demand in ASEAN countries and the Middle East, with fresh penetration this year in South Korea and European Union markets, said Cai Long, director of Weifang Customs.

In February, at a "lights-out factory" in the coastal city of Weihai in Shandong, intelligent production lines hummed around the clock, manufacturing critical engine components. Robotic arms perform precision crankshaft machining, polishing and conducting inspections in the fully automated facility.

"Exploding demand for on-site power generation from North American data centers has created massive new opportunities for large engine core components," said Xu Chengfei, president of Tianrun Industry Technology. Orders from global majors, including Cummins and Caterpillar, are already booked through 2028, cementing the company's position as a critical supplier in the booming backup power sector, Xu added.

Safewell Group, a security equipment manufacturer in the eastern city of Ningbo, Zhejiang province, has repurposed its existing production capacity to launch liquid cooling products for computing servers, with orders now booked through June.

At Eaglerise, headquartered in South China's Foshan in Guangdong province, new energy transformers and data center-specific units roll off the production line awaiting final inspection before overseas shipment. The transformer maker has also established capacity in Thailand and Mexico.

"China has become the world's largest transformer manufacturer, with capacity accounting for approximately 60 percent of the world's total," said Cai Yiqing, secretary-general of the electric power equipment branch of the China Electricity Council.

Computing power is highly dependent on a stable electricity supply, as training networks with tens of thousands of AI accelerators can suffer catastrophic data loss from even millisecond power interruptions. This creates critical dependence on highly reliable transformers and energy storage systems.

China's strength in AI trade reflects its "dominance in key raw materials, scale advantages, cost competitiveness and well-integrated manufacturing ecosystems", making it "well positioned to leverage its comprehensive and cost-effective supply chain to serve the global AI market", according to the Standard Chartered report.

Notably, the country's rapid growth extends beyond AI-supportive infrastructure to the components that directly power AI computation. Combined exports of memory and processor components surged 39.1 percent year-on-year in the first three months, said the General Administration of Customs.

Zhongji InnoLight, a leading Chinese high-speed optical module manufacturer, reported in its 2025 annual statement that net profit surged over 108 percent year-on-year, fueled by robust expansion in computing power infrastructure, and its first quarter results show an even steeper increase of approximately 265 percent. This echoed GAC data showing that China's exports of optical transceivers for artificial intelligence chips jumped nearly 60 percent last year.

"Amid geopolitical disruptions, China has rapidly scaled up production across legacy chips, memory semiconductors and AI-supporting components, and this expansion has not only filled global supply gaps, but also delivered efficient, stable and cost-competitive supply," Liu Yiming, an associate professor at Shandong University's School of Economics, told Xinhua News Agency.

In late February, Goldman Sachs Research introduced the concept of HALO (heavy assets, low obsolescence) to describe energy systems, supply chains, infrastructure and national security capabilities that are strategic, scarce and increasingly valued. These assets are believed to be increasingly vital because they are difficult to replicate and retain their industrial importance across waves of AI advancement.

Against this backdrop, China's manufacturing sector has taken on heightened global significance."This growth reflects not short-term volatility, but rather is testament to China's industrial chain resilience and competitiveness," added Liu.

In the first quarter, China's value-added output in equipment manufacturing increased by 8.9 percent year-on-year, while high-tech manufacturing grew by 12.5 percent — surpassing overall industrial growth by 2.8 and 6.4 percentage points, respectively.

"China remains committed to open integration with the global system, opposing decoupling and unilateral monopolies," said Liu."Through reliable supply, it serves as a dependable stabilizer, providing solid ballast that enables the global AI industry to navigate risks and sustain innovation."

Xinhua