What's Happening?
China is reportedly planning to establish a national network to connect thousands of new data centres across the country. This initiative aims to sell excess compute power and address the current capacity glut. The Ministry of Industry and Information Technology (MIIT) is collaborating with major telecom companies like China Mobile, China Unicom, and China Telecom to link these data centres. The data centre boom began in 2022 as part of an infrastructure project to build more facilities in the western part of China, where power is cheaper, to meet demand on the eastern seaboard. Despite significant investment, with Beijing spending CNY24.7 billion (US$3.4 billion) in 2024, many data centres have faced financial challenges, leading to low utilization rates and closures. The proposed solution involves a centralized state-run cloud platform to manage and sell excess computing power.
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Why It's Important?
The development of a national network to manage excess data centre capacity is crucial for China's ambitions to become a global leader in artificial intelligence. By addressing the capacity glut, China can prevent further closures of data centres, which are vital for AI development. This move also reflects China's strategic approach to optimize its infrastructure investments and enhance its technological capabilities. The initiative could have significant implications for the global tech industry, as it may influence data centre operations and cloud computing strategies worldwide. Additionally, it highlights China's commitment to maintaining its competitive edge in the technology sector.
What's Next?
The National Development and Reform Commission (NDRC) has already taken steps to regulate data centre growth, including closer scrutiny of new projects and restrictions on local government participation in small computing infrastructure projects. The centralized cloud platform is expected to handle unified organization, orchestration, and scheduling capabilities, with plans for standardized interconnection of public computing power nationwide by 2028. These measures indicate a structured approach to managing data centre capacity and ensuring sustainable growth in the sector.
