China is reportedly planning to build a network to connect thousands of new data centres in the country with the aim of selling the excess compute power and alleviating a capacity glut.
According to a report from Reuters on Thursday, citing two unnamed sources and a document, the Ministry of Industry and Information Technology (MIIT) is collaborating with China Mobile, China Unicom and China Telecom to link thousands of local government-backed data centres that have popped up around the country over the past three years.
The data centre boom is the result of an infrastructure project launched by Beijing in 2022 to build more data centres in the western part of the country (where power is cheaper) that can serve demand on the eastern seaboard.
Reuters said Beijing invested CNY24.7 billion (US$3.4 billion) in data centre projects in 2024, a roughly ten-fold increase from 2023. As of June this year, the government has licenced at least 7,000 data centres since 2022. But last year, over 100 were cancelled due to financial unviability, and utilisation rates are as low as 20% to 30%, the report said.
Beijing is reportedly worried that the capacity glut could lead to more facility closures, which in turn could throw a wrench in China’s plans to be a global leader in AI development.
The proposed solution is to connect the data centres to a centralised national, state-run cloud platform that will sell excess compute power, the report said.
Chen Yili, deputy chief engineer at the China Academy of Information and Communications Technology, told an industry conference in Beijing last month that the platform will handle “unified organisation, orchestration, and scheduling capabilities," the report added.
Chen also said Beijing wants to see standardised interconnection of public computing power nationwide by 2028.
Meanwhile, the National Development and Reform Commission (NDRC) has already stepped in to curb data centre growth, with closer scrutiny on new projects planned after March 20 and a ban on local government participation in small computing infrastructure projects, the report said.
