China’s economic planners have plotted ways of shifting resources from energy-rich areas to energy-consuming ones for years. Thus the massive investment in projects such as the 20,000-kilometre West-to-East Gas Pipeline that delivers natural gas from western China to markets in the east of the country, as well as the various pipelines carrying fuel imported from Russia and Central Asia to more affluent cities in China’s southeast.
Similar thinking underlines the South-to-North Water Diversion Project, which cost at least $62 billion (twice as much as the Three Gorges Dam) to complete. It aims to pipe 45 billion cubic metres of water a year from the south to the more arid areas of the north, including Beijing.
And now another major shift of resources is underway, although this time of a much newer commodity in the Chinese economy: data. Step forward the East-to-West Computing Resources Transfer Project, which is building a mammoth network to send data gathered in more affluent regions in the east to western provinces like Guizhou and Gansu for storage and calculation.
Last week the National Development and Reform Commission announced the construction of eight major computing hubs and 10 national data centre clusters. The project will improve “the imbalance in the layout of digital infrastructure and maximise the value of data,” an industry insider told the People’s Daily.
The NDRC estimates that there were more than five million data centres in China by the end of last year. GDS Services, the biggest operator, is listed on Nasdaq. It signed contracts for more than 400,000 square metres of floor area (up 51% on the year) in 2020 – equivalent to a surface area of 60 football pitches.
It is less cost-effective to set up these facilities in first-tier cities, where land prices are much higher. Electricity supply also comes into the equation, because cloud computing is an energy-intensive industry. According to Huxiu, a news portal, data centres accounted for about 2.2% of China’s overall electricity consumption in 2018 and its share was expected to jump to 4.1% by 2025.
These projections add to pressure on Beijing’s policy commitments to go carbon neutral by 2060. Moving more of the data centres to inland provinces in the west brings them closer to the sources of much of China’s renewable energy. The power there is more cheaply available as well, which will help to cut costs for operators such as GDS.
There’s also the challenge, of course, of building a network that moves data quickly and reliably between the places where it is needed and generated to servers and storage facilities thousands of kilometres away. In the NDRC’s networking plan accelerator stations will be installed at nodal points near major cities in the Greater Bay Area and across the Yangtze River Delta, speeding data transfer.
Data centres and cloud computing platforms are a key battleground for Chinese internet firms. Two years ago Alibaba committed to invest Rmb200 billion ($31.7 billion) into the sector by 2023. A few months later Tencent announced its own ‘five year plan’ for up to Rmb500 billion of investment in ‘new infrastructure’. The East-to-West Computing Resources Transfer Project will supercharge the struggle, triggering new rivalries in cloud computing and data management services, as well as the infrastructure that supports.
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