Summary of China CIO 2H25 Survey: The Worst May Be Over Industry Overview - **Industry**: China IT Services and Software - **Survey Date**: November 27, 2025 - **Key Focus**: Insights from CIOs regarding IT budget allocations and trends in AI adoption Key Findings IT Budget Growth - **2025 IT Budget Growth**: Revised upward to 7.4%, an increase of 1.6 percentage points from the previous survey, marking the first upward revision since 2H21 [2][12] - **2026 IT Budget Growth Expectation**: Anticipated growth of 12.6%, indicating a recovery from previous trade tensions, with software expected to lead at 13.1% growth [3][12][16] - **Long-term Investment Confidence**: 47% of CIOs expect IT spending as a percentage of revenue to grow over the next three years, up from 34% previously [12][26] Shift in Budget Drivers - **Primary Driver Shift**: The focus has shifted from macroeconomic conditions to micro-level business growth, with 44% of CIOs citing business requirements as the top factor influencing IT spending [12][27] - **Vendor Price Competition**: 88% of CIOs reported increased aggressive discounting from vendors, indicating ongoing supply-side challenges despite a five-year down cycle [12][44] AI Adoption Trends - **AI as a Priority**: AI remains the top investment priority, but the pace of adoption has moderated, with many CIOs delaying their first AI projects to 2026 [4][11][55] - **AI Budget Allocation**: The share of IT spending allocated to AI is projected to rise from 7.7% in 2025 to 13% in 2026, with a notable shift towards purchasing AI applications rather than building them in-house [12][55][69] - **Public Cloud Adoption**: 38% of CIOs plan to accelerate public cloud usage next year, with Alibaba expected to be the biggest beneficiary in AI and cloud spending [12][55] Enterprise Type Insights - **State-Owned vs. Privately Owned Enterprises**: Both SOEs and POEs revised their 2025 IT budgets upward to 8.3% growth, but POEs are expected to lead in 2026 with 13.3% growth compared to SOEs' 12.5% [12][37][41] Other Notable Insights - **ERP Resilience**: ERP systems regained their position as a resilient spending segment, ranking second in terms of least likely to be cut [51] - **Data Center Investments**: There is an increasing interest in data center build-outs, with 9% of CIOs indicating it as a priority for increased spending [50] Conclusion The survey indicates a positive shift in the outlook for the China IT Services and Software industry, with CIOs showing renewed confidence in budget growth and a strategic focus on AI and cloud technologies. The normalization of IT budgets and the shift towards micro-level business growth are critical trends to monitor moving forward.