China’s digital economy: network of data centre hubs to address infrastructure imbalance between east and west

Four of China’s top regulatory and policymaking agencies will spearhead the strategy dubbed ‘Eastern Data and Western Computing’
The country had about 5 million data centres in 2020, up from 1.24 million in 2015

China technology

Celia Chenin Shenzhen

Published: 7:59pm, 27 May 2021

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China will launch a new national data centre strategy to further expand the country’s digital economy, while meeting Beijing’s ambitious green targets, according to a report by state media China Central Television (CCTV) on Wednesday.

The initiative, dubbed “Eastern Data and Western Computing”, will have data gathered from the more prosperous cities along China’s eastern seaboard sent to poorer yet more spacious urban centres in the west for processing and storage.

Four of the country’s top regulatory and policymaking authorities – the National Development and Reform Commission (NDRC), Cyberspace Administration of China, Ministry of Industry and Information Technology (MIIT) and the National Energy Administration – will spearhead implementation of this strategy, according to the CCTV report. No timetable was given.

“[Under this plan], we are trying to solve the problem of supply imbalance of data centres between the east and the west,” said Shen Zhulin, director of the NDRC’s Department of High-Tech Industry, at the opening on Wednesday of the three-day China International Big Data Industry Expo 2021 in Guiyang, capital of southwestern Guizhou province. The NDRC is the main agency involved in drafting China’s five-year plans.

A visitor walks past an outdoor installation displaying a QR code at the China International Big Data Industry Expo 2021 in Guiyang, capital of southwest China's Guizhou province, on May 26, 2021. Photo: Xinhua

The strategy will involve setting up national data centre hubs in the Beijing-Tianjin-Hebei area, the Yangtze River Delta region, the Guangdong-Hong Kong-Macau Greater Bay Area, the Chengdu-Chongqing city cluster, Guizhou province and the Inner Mongolia autonomous region, as well as the northwestern province of Gansu and the Ningxia Hui autonomous region.

“In previous times, China had the South-to-North Water Diversion Project, which involved drawing water from southern rivers and supplying it to the dry north,” said Zhang Dingding, the former head of Beijing-based research firm Sootoo Institute. “I believe the new strategy has similar importance for China’s development. The internet and data are now as important as water and electricity.”

Data centres are secure, temperature-controlled facilities built to house large-capacity servers, data storage systems, multiple power sources and high-bandwidth internet connections. These facilities are used by companies to remotely store large amounts of data and host cloud computing services, which enable users to buy, lease or sell software and other digital resources online on demand, just like electricity from a power grid.

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There were about 5 million data centres in China as of last year, up from 1.24 million in 2015, according to Shen from the NDRC.

The demand for digital infrastructure, including data centres, has grown around the world because of the coronavirus pandemic’s impact on businesses and consumers. More people now depend on the internet to use applications to work from home, buy goods online and access content for entertainment, education or health care.

China’s digital economy surged to 39.2 trillion yuan (US$6 trillion) last year, an increase of 3.3 trillion yuan from 2019, according to a white paper published by the China Academy of Information and Communication Technology, a think tank affiliated with the MIIT.

The growth of China’s digital economy, however, has resulted in unconnected “data centre islands” and “cloud islands” across the country, the CCTV report said. It indicated that China’s new strategy would enable the development of connected and more efficient clusters of data centres in the identified hubs.

“If the strategy can connect [data centres in] the east with the west, then energy costs could get lower,” analyst Zhang said. “It will no longer be necessary to build more data centres in the east, which can help conserve energy in line with China‘s carbon neutrality goals.”

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