China opens the door to foreign-owned data centres under new pilot scheme

October 24, 2024 10:32 AM

The Chinese government has opened the doors to foreign investors to operate data centres in the country under a new pilot project.

State media site Xinhua said the Ministry of Industry and Information Technology’s project would introduce designated areas where foreign-owned facilities could provide digital infrastructure services for local businesses.

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"The pilot program marks a new phase of China's opening-up in the telecommunications sector," said Jin Zhuanglong, minister of industry and information technology.

Prior to the pilot, foreign investors faced restrictions on owning and operating sites in China. The local government typically limited ownership of sites like data centres to domestic companies. Foreign firms were confined to participating in joint ventures with local firms and were limited to owning no more than 50% of any joint consortium.

The project would allow foreign investors to invest in “value-added telecom services” in four designated areas in Beijing, Shanghai, Hainan, and Shenzhen.

Site owners can operate wholly-owned businesses and provide data processing and transaction processing within the confines of the designated areas.

Wang Zhiqin, deputy director of the China Academy of Information and Communications Technology, told state media the pilot programme would drive the integration of digital technologies for sectors across the country.

The projects form part of China’s wider attempts to open up its services sector, such as the free trade zones like the 120 square kilometre Lin-gang Special Area zone.

Chinese state media suggested that 2,220 foreign-invested companies hold licences to operate telecom businesses in the country, with the new pilot programmes aimed at increasing opportunities for foreign investments.

The Ministry of Industry and Information Technology plans to actively monitor the pilot and will consider expanding its scope “at an appropriate time.”

Looking to take an early advantage of the pilot is HSBC’s Chinese fintech subsidiary, which reportedly applied for an internet content provider permit.