What's Happening?
China is reportedly developing a national network to connect thousands of data centres across the country, aiming to sell excess computing power and address a capacity surplus. This initiative, led by the Ministry of Industry and Information Technology (MIIT) in collaboration with major telecom companies like China Mobile, China Unicom, and China Telecom, seeks to link data centres that have proliferated since 2022. The surge in data centre construction was part of a government infrastructure project to build facilities in the western regions, where power is cheaper, to meet demand on the eastern seaboard. However, the rapid expansion has led to low utilisation rates, with some centres operating at only 20% to 30% capacity. The proposed solution involves creating a centralised, state-run cloud platform to manage and sell the surplus compute power.
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Why It's Important?
This development is significant as it highlights China's strategic efforts to optimise its data infrastructure and maintain its position as a leader in AI development. The capacity glut poses a risk to the sustainability of data centres, potentially leading to closures and impacting China's AI ambitions. By centralising excess capacity, China aims to enhance efficiency and support its growing digital economy. This move could also influence global data centre operations and AI development strategies, as other countries may look to similar solutions to manage their own infrastructure challenges.
What's Next?
The Chinese government is expected to continue refining its data centre strategy, with the National Development and Reform Commission (NDRC) already imposing stricter controls on new projects. The focus will likely be on ensuring the viability of existing centres and preventing further overcapacity. Additionally, the centralised cloud platform is anticipated to become operational, providing a framework for more efficient use of computing resources. Stakeholders in the tech and telecom sectors will be closely monitoring these developments, as they could impact international data centre investments and partnerships.
