Insights on China’s Data Center Market

The ubiquity of new technology, from smart phones to 3D-printers, is a sign that the fourth Industrial Revolution is upon us. Feeling the impact of this technological shift, China is striving to advance Industry 4.0 through its investment in an expanded network of data centers—the global currency of the new technological market.

The Rise of the Chinese Data Center Market

The data center market in China is vast and growing exponentially. A recent report by analysts at Mordor Intelligence valued the market at $13 billion in 2020 and expects it to reach $36 billion by 2026, at a compounded annual growth rate of 19.2%. This growth is supported by China’s leadership in computing: with 227 supercomputers as of June 2020, China has top technological capacity.

Demand for increased computing capacity is fueled by emerging technologies as well as the pandemic. Smart devices, 5G, the Internet of Things (IoT), AI, blockchain, quantum computing, and the uptick of mobile payment systems in China all contribute to the rising need for data centers. Large enterprises that operate in China including Alibaba, Tencent, Baidu, Microsoft, and AWS require highly secure and interconnected facilities to keep up with the quantity and quality of digital services and experiences that their consumers demand.

The Chinese data center market was valued at $13 billion in 2020 and is expected to reach $36 billion by 2026

The COVID-19 pandemic accelerated this demand as data usage spiked during lockdown. As in many nations around the world, strict quarantine measures in China forced many people to depend on e-commerce. According to Mordor Intelligence, the online entertainment market also grew enormously as people were connecting remotely for both work and entertainment in their homes. The corresponding boom in data usage is expected to continue as video streaming, e-commerce, games, and other businesses maintain their strong positions in the Chinese market. Currently, more than 70% of China’s 1.4 billion population uses e-commerce services, and more data centers are being built to respond to this growing need.

China Telecom: Meeting the Moment

To keep up with growing demand for data center space, China Telecom, the parent company of China Telecom Americas, is building a new 200,000 square meter cloud connected  facility in Sichuan province. Located in the Yibin Lingang Economic and Technological Development, the data center aims to provide service to Sichuan’s Tier 1 cities, Chengdu and Chongqing. The Chengdu-Chongqing metro area is one of eight nodes that China Telecom services, along with Beijing-Tianjin-Hebei, Yangtze River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, Inner Mongolia, Guizhou, Gansu, and Ningxia.

The Sichuan data center boasts a capacity of 10,000 cabinets and extensive security, including monitoring cameras, a micro shield access control system, and dynamic detection. It also features a carrier-neutral fast Internet, redundant backup system, temperature- and humidity-controlled environment, and abundant power resources at low operating costs. Minding the long-term impacts of construction, the data center’s future-focused energy-saving and environmental protection technology ensures low carbon emissions.

China Telecom’s Additional Initiatives

The Sichuan project is one of several that China Telecom, China Telecom Americas’ parent company, is undertaking to enable cloud-network integration in China. An ISO/IEC 20000 certified provider, China Telecom is internationally recognized for exceptional IT service management. Its cloud-to-digital transformation strategy is based on a simple model: the network is the foundation, the cloud is the core, the network moves with the cloud, and the cloud and network are integrated. To bring this model to life, China Telecom is participating in the overall layout design of the national integrated big data center system.

A key part of the strategy is to centralize the layout of computing resources in eight metro areas. China Telecom’s shift from networks based on administrative divisions to networks based on hubs optimizes the benefits of cloud technology. It provides better cloud access to major population and business centers, more efficiently concentrating resources in areas of China that need them the most. The aim is to make up for shortage of resources in the east while fully revitalizing resources in the west—thereby integrating both the eastern and western nodes into one cohesive network.

China Telecom is also reducing the operating expense of data centers. A major driver of cost is energy usage, so China Telecom is investing in state-of-the-art energy-efficient technology to offer better prices while also protecting the environment. As more and more enterprises emphasize sustainability in their financial models, data centers that are truly green will prove their value in spades.

China Telecom’s cloud-to-digital transformation strategy is based on a simple model: the network is the foundation, the cloud is the core, the network moves with the cloud, and the cloud and network are integrated.

With data usage skyrocketing, China is set to lead the global data center market with the help of key partners like China Telecom, whose infrastructure includes over 180 tier 3+ data centers across China and over 100 points of presence globally to serve customers. China Telecom’s cloud-to-digital transformation strategy allows businesses and consumers to reap the full benefits of cloud technology. Its initiatives will bring security, sustainability, and cost-effectiveness to the Chinese data center market, fueling the technological advances of the future.

To learn more about China Telecom’s data center strategy, check out our slide deck.