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<\/a><\/p>\n\u201cEverything will be handed over to our cloud to perform unified organisation, orchestration, and scheduling capabilities,\u201d Chen Yili, deputy chief engineer at the China Academy of Information and Communications Technology, a think tank affiliated to the industry ministry, told an industry conference in Beijing last month. Chen did not specify details of the cloud service proposal, but his presentation materials showed China was targeting standardised interconnection of public computing power nationwide by 2028.<\/p>\n
Some analysts were skeptical about the plan given the technological challenges it posed.<\/p>\n
China Mobile, China Unicom and China Telecom, the state-run telecom companies, and MIIT did not respond to requests for comment<\/p>\n
Unused computing power and financially shaky data centres could hinder China\u2019s ambitions for artificial intelligence supremacy.<\/p>\n
Boom and bust <\/p>\n
China\u2019s data centre building boom kickstarted in 2022 after Beijing launched an ambitious infrastructure project called \u201cEastern Data, Western Computing\u201d, aimed at coordinating data centre construction by concentrating facilities in western regions \u2013 where energy costs are cheaper \u2013 to meet demand from the eastern economic hubs.<\/p>\n
Chen said at the June event that the industry ministry has so far licensed at least 7,000 computing centres.<\/p>\n
A Reuters review of government procurement documents for data centres used in computing shows a surge last year in state investment, totalling 24.7 billion yuan (US$ 3.4 billion), compared to over 2.4 billion yuan in 2023, a 10 times increase over the one-year period.<\/p>\n
This year, already 12.4 billion yuan (half of 2024\u2019s total) has been invested in these centres, most of them in the far-west region of Xinjiang.<\/p>\n
But while only 11 such data centre-related projects were cancelled in 2023, over 100 cancellations occurred over the past 18 months, pointing to growing concerns among local governments about returns on their investments.<\/p>\n
Driven by expectations that government and state-owned firms will act as buyers, investors and local governments tend to build on speculation, said a project manager who works for a server company that provides products for such data centers.<\/p>\n
\u201cThe idea of building data centers in remote western provinces lacks economic justification in the first place,\u201d said Charlie Chai, an analyst with 86Research, adding lower operating costs had to be viewed against degradation in performance and accessibility.<\/p>\n
To regulate the sector\u2019s growth, China\u2019s state planner National Development and Reform Commission (NDRC) initiated a nationwide assessment earlier this year that has already tightened scrutiny of new data center projects planned after March 20, and banned local governments from participating in small-sized computing infrastructure projects.<\/p>\n
The NDRC aims to prevent resource wastage by setting specific thresholds \u2013 such as requiring a computing power purchase agreement and a minimum utilisation ratio \u2013 to filter out unqualified projects, according to a person familiar with the matter, who did not provide details on the thresholds.<\/p>\n
NDRC did not respond to a request from the press for comment.<\/p>\n
Tech gap <\/p>\n
Industry sources and Chinese policy advisers said the formation of a computing power network will not be easy, given that the technology for data centers to efficiently transfer the power to users in real-time remains underdeveloped.<\/p>\n
When the Chinese government rolled out the Eastern Data, Western Computing project, it targeted a maximum latency of 20 milliseconds by 2025, a threshold necessary for real-time applications such as high-frequency trading and financial services.<\/p>\n
However, many facilities, especially those built in the remote western regions, still have not achieved this standard, the project manager said.<\/p>\n
Many of the centres also use different chips from Nvidia and local alternatives such as Huawei\u2019s Ascend chips, making it difficult to integrate various AI chips with different hardware and software architectures to create a unified cloud service.<\/p>\n
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