China has invested $6.1 billion (43.5 billion yuan to be exact) in a new data center project called “East Data, West Computing” launched in 2022. While many of its neighbors and global rivals try to limit China’s technological prowess, China is installing millions of server racks and computers to connect the west and east.
Liu Liehong, director of the State Data Administration of China, revealed the 43.5 billion yuan figure to reporters today at the Big Data Expo, a global data conference in southwest China. The expo is being held in Guizhou province, a major data center hub in China and known as the home of Apple’s Chinese data servers.
The “East Data, West Computing” initiative was first announced by the Chinese government in 2021 and launched in the first few months of 2022. Most of China’s urban centers are located near the east coast, causing infrastructure congestion. Western China has greater room for development and is rich in open land and energy, making it the perfect place to offload the east’s massive data demands.
Eight data computing hubs are under construction, three in densely populated areas on the east coast and five in China’s central/western corridor to process data stored in the three eastern hubs. Construction in Beijing is 10 times more expensive than in the western provinces, and electricity costs are almost double, making China’s western provinces the best place to set up high-cost, location-independent infrastructure like data centers that use this hub system. China is also looking to create high-skill jobs to maintain the centers and attract workers to the western region, which contributes to regional growth.
According to Liehong’s Big Data Expo report, over 1.9 million server racks have been installed, with 1.2 racks in use across the hub. China would be wise to move quickly to set up data centers, as global trade is not sympathetic to China’s technology needs. The US-China trade war over technology has been raging for years with no end in sight. ASML CEO Peter Wennick has expressed the view that the chip war will continue for decades to come. China’s technology problems will only get worse as sanctions against China by the US, Taiwan, and the EU continue to tighten.
It is unclear where all the components of the “East Data, West Computing” project will be sourced from. Huawei has been a key partner in the project’s development, but the extent of its involvement is unclear. President Xi Jinping wants a “Digital China” that runs exclusively on domestically produced hardware, and these data centers will likely make limited use of products from Nvidia and other non-Chinese companies.
