With over 900 million internet users, China is seeing a boom in its digital infrastructure market. The increasing demand for technologies like 5G, advanced Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT) etc. is driving the demand for more reliable digital infrastructure. Today, China is the second top data centre market globally, after the United States. Here’s a closer look at one of the largest data centres markets in the world.
China’s Data Center Market
According to a report by Mordor Intelligence, the data centre market in China stands at 2.32 GW in 2024 and this number is expected to increase to 3.35 GW by 2029. The data centre market in China boasts one of the world’s highest Compound Annual Growth Rates (CAGR) at 8.97 percent.
Key players within the Chinese market include both local and international internet companies. These include China Telecom Corporation Ltd, Equinix Inc, GLP Pte Limited, Keppel DC Reit Management Pte Ltd and Princeton Digital Group, who together make up 12.58 percent of the market, according to Mordor Intelligence. Other important players include Huawei Cloud, Chindata, GDS, VNET etc.
Evolution of China’s Data Center market: East Data, West Computing
Initially, most of the data centres in China were located in the Eastern regions like Shanghai, Beijing etc. But large scale development of data centres was not sustainable in these areas where land, energy and other resources were scarce.
Hence in 2022, the National Development and Reform Commission (NDRC) introduced a new concept called “East Data, West Computing” (东数西算). The idea is to generate data in the economically advanced and densely populated eastern regions, where digital and industrial development is high. This data is then processed in the resource-rich western regions, which have ample land and energy but lower data demand. The climate and geographical locations also make building sustainable data centres more plausible in the western regions.
The implementation of the project will create an integrated national system of hyperscale data centres and also strengthen the planning and intelligent scheduling of computing power, according to Chinese tech major Huawei. Hub nodes will be built and deployed in the following areas, Beijing-Tianjin-Hebei Metropolitan Region, the Yangtze River Delta, and the Guangdong–Hong Kong–Macau Greater Bay Area in eastern China, and Chengdu, Chongqing, Guizhou, Inner Mongolia, Gansu, and Ningxia in central and western China.
In June this year, Huawei announced the official opening of the Huawei Cloud East China (Wuhu) Data Centre, marking the completion of Huawei Cloud’s national store and computing network hub layout. The launch of this first project in the Wuhu Data Centre cluster signifies that the Yangtze River Delta hub of the “East Data, West Computing” initiative can now provide large-scale computing power services to the East China and Central regions, strongly supporting the development of the AI industry in these areas.
One of the key global players in the Chinese market, Equinix, has also announced its plan to invest US$124 million on its 6th data centre in Hong Kong. This new expansion aims to serve the greater bay area, by housing 3,550 cabinets in the Tsuen Wan facility.
The continuous expansion and investment into the data centre industry amidst the country’s economic downturn signifies the importance of the IT infrastructure as key drivers for growth and stability.
In a statement released by a Chinese local news agency, Minister of Industry and Information Technology Jin Zhuanglong said, “Data infrastructure is crucial for the integration of the real economy with the digital economy.”
Prioritising Sustainability
Apart from acknowledging the need to manage the distribution of data centres within the Chinese market, the government is also placing emphasis on their goals to achieve carbon peak and carbon neutrality. Set to reach its carbon peak by year 2030, the government launched a thorough implementation plan for all stakeholders within the market.
By 2025, China aims to be able to significantly improve the energy efficiency and renewable energy use in data centres and 5G infrastructure. It hopes to improve the average energy efficiency of new large and super-large data centres nationwide, attempting to bring it below 1.3, with national hub nodes further decreasing to below 1.25, achieving a green and low-carbon rating of 4A or higher.
Other than promoting sustainable data centres through traditional means, China is also seeking innovative ways to build digital infrastructures more sustainably. In July this year, China announced the official construction of its first commercial underwater data centre in Hainan. By making use of the power from cold seawater to cool its operations, the data centre will reduce energy consumption significantly upon completion.
As investments keep growing, and technological innovations continue, China’s role as a leader in both technological advancement and sustainable development is set to strengthen, positioning the country as a key player in the global digital economy.
