China’s cloud market is undergoing a profound transformation as enterprises seek to harness the benefits of artificial intelligence while navigating an increasingly complex regulatory and risk landscape.
Having largely completed the initial phase of cloud migration, organisations are now rethinking how cloud infrastructure can deliver long-term business value, resilience and competitive differentiation. Against this backdrop, Forrester’s latest research points to the emergence of a more mature, strategic approach to cloud adoption in China.
According to Forrester’s The State of Cloud in China, 2026 report, three-quarters of cloud decision-makers now have more than six years of public cloud experience. Rather than focusing on basic infrastructure moves, organisations are investing in modernisation initiatives, new digital services, and advanced capabilities such as analytics and AI.
The market’s maturity is reflected in the widespread adoption of hybrid cloud, with 92 percent of enterprises now operating a mix of public and private cloud environments. This approach allows organisations to combine the scalability and innovation of public cloud services with the control and security of private infrastructure, particularly for sensitive data and AI workloads.
Charlie Dai, VP and principal analyst at Forrester, said, “China’s cloud market is entering a more complex and strategic phase, where compliance, innovation, and industry specialisation intersect.”
Dai added that organisations must move beyond basic cloud adoption to build resilient, compliant, and AI-native architectures. Those that align cloud strategies with regulatory realities while investing in differentiated capabilities will be best positioned to unlock long-term value and competitive advantage.”
This shift is taking place against a backdrop of evolving regulations, economic uncertainty and rapid advances in generative AI. China’s Personal Information Protection Law, Data Security Law and MLPS 2.0 framework have elevated data sovereignty and compliance from operational concerns to core architectural principles. As a result, enterprises are increasingly adopting sovereign and hybrid cloud models that allow sensitive data and critical workloads to remain under tighter control.
AI drives competition
The rapid rise of generative and agentic AI is redefining the role of cloud infrastructure. Enterprises increasingly view cloud platforms as the foundation for AI model training, inference and deployment, elevating AI capabilities to a key differentiator among providers. In response, cloud vendors are expanding AI services, strengthening developer ecosystems and delivering industry-specific solutions that accelerate adoption.
With economic uncertainty and geopolitical risks adding complexity to the operating environment, enterprises are paying closer attention to workload resilience, cost transparency and vendor dependence. Hybrid and multi-cloud strategies are being used to mitigate these risks, while industry-tailored cloud platforms are gaining traction by embedding compliance and domain expertise directly into the cloud stack.
Forrester expects Chinese enterprises to deepen investments in cloud-native platforms, AI infrastructure and governance frameworks in the years ahead. As competition among domestic providers intensifies, enterprises that align their cloud strategies with regulatory requirements and industry-specific needs will be best positioned to gain a lasting edge.
