China plans to launch space based artificial intelligence data centres over the next five years, state media reported on Thursday, a challenge to Elon Musk’s plan to deploy SpaceX data centres to the heavens.

Axar.az informs, citing Reuters, China's main space contractor, China Aerospace Science and Technology Corporation (CASC), vowed to "construct gigawatt-class space digital-intelligence infrastructure," according to a five-year development plan that was cited by state broadcaster CCTV.

The new space data centres will "integrate cloud, edge and terminal (device) capabilities" and achieve the "deep integration of computing power, storage capacity and transmission bandwidth," enabling data from Earth to be processed in space, the report said.

U.S. firm SpaceX expects to use funds from its planned $25 billion blockbuster IPO this year to develop orbital AI data centres in response to terrestrial energy constraints.

SpaceX plans to launch solar powered AI data center satellites within the next two to three years, Musk said at the World Economic Forum in Davos, Switzerland, last week.

He said solar generation in orbit can produce five times more power than panels on the ground.

China also plans to shift the energy-intensive burden of AI processing into orbit, utilising "gigawatt-class" solar-powered hubs to create an industrial-scale "Space Cloud" by 2030, according to a December CASC policy document.

China and the U.S. are competing as they look to turn space exploration into a commercially viable business similar to civil aviation, as well as becoming the first to exploit the military and strategic advantages of space dominance. CASC has vowed to transform China into a "world-leading space power" by 2045.