China's Cloud Market Intensifies in 2026 as Enterprise Demand Peaks, Vendors Shift to Consumers

In 2025, China's cloud computing market reached RMB 1,069.2 billion, up 29% year on year. The IaaS segment totaled RMB 520.9 billion, with growth slowing from 36% in the prior year to 24%. PaaS reached RMB 173.6 billion, growing 67% due to large-scale adoption of AI platforms. Market growth is concentrated in the AI platform layer, while underlying compute leasing has decelerated and new customer additions have peaked.

Alibaba Cloud's share of China's IaaS market rose from 30.1% in 2024 to 32.8% in 2025, with revenue up 34.4% year on year. China's AI cloud market totaled RMB 56.7 billion, with Alibaba Cloud leading at 38.1%, followed by Volcano Engine at 20.4%, Baidu Cloud at 9.4%, Tencent Cloud at 6.3%, and Tianyi Cloud at 5.9%. Some leading cloud vendors have launched "firefighting actions" to benchmark against ByteDance's Volcano Engine.

Some vendors are offering price concessions to compete for existing customers. Cloud services require strong after-sales support, and new entrants lack experience and talent, but products are increasingly similar, making sales capability key to customer acquisition. In the first half of 2026, with the emergence of numerous single-person companies, vendors are intensifying their push into the consumer market.

Volcano Engine, leveraging its Doubao and Seedance product lines, has benefited from the boom in AI short dramas and built a customer base. In China's public cloud MaaS market, Volcano Engine ranked first with a 49.5% share. Tencent launched WorkBuddy, an AI agent-based workbench, which is growing rapidly in the consumer market.

Consumer customers make decisions quickly and are price-sensitive, but they lack deployment and operations capabilities and require vendor support. Vendors need to invest in manpower or provide low-code tools. Volcano Engine and Tencent Cloud are actively pursuing the consumer market.