Data from IDC showed that the investment scale of global AR and VR markets was close to $14.67 billion in 2021, and is expected to increase to $74.73 billion in 2026, with a compound annual growth rate or CAGR of 38.5 percent. Specifically, the CAGR of the Chinese market is expected to reach 43.8 percent during this period, ranking first across the globe.

Chinese tech giants have jumped on the metaverse bandwagon and invested heavily in state-of-the-art VR and AR technologies.

IDC said the IT-related expenditure in China's AR and VR market reached about $2.13 billion in 2021 and will increase to $13.08 billion in 2026, making it the second-largest market in the world. Specifically, AR expenditure will increase rapidly with a 49 percent of CAGR, while VR expenditure will maintain steady growth with 41.5 percent of CAGR.

The AR/VR-related hardware products will grow steadily with a compound annual growth rate of 47.8 percent in China, which is expected to occupy more than half of the country's AR/VR expenditure, the report said.

IDC predicted that over the next five years, VR games will account for 30 percent of the country's total VR market. VR-powered games, training and collaborations are expected to become the main application scenarios of VR in 2026.