China opens doors to 100% foreign-owned data centers

The Ministry of Industry and Information Technology (MIIT) of the People’s Republic of China is opening the door to foreign investors – they will now be allowed to build data centers wholly owned by a foreign legal entity. According to Datacenter Dynamics, MIIT launched a pilot project aimed at attracting foreign telecom companies to the country.

The project covers special zones in Beijing, Shanghai, Hainan and Shenzhen. In these zones, foreign investors will be able to manage fully foreign-owned businesses, including data centers, and participate in online data processing. Companies will also gain wider access to Chinese cloud services and computing resources. The program marks a new phase of China’s opening up in the telecom sector, the ministry said.

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It is expected that the new measures will help diversify the IT market in China itself, and this will also give the country the opportunity to “share” its digital economy with the rest of the world. Among the participants in the pilot project is HSBC Fintech Services Shanghai Company Limited, owned by HSBC. According to rumors, the company intends to obtain the status of “Internet content provider.” Another participant would like to be Tesla, which has already submitted an application. Its Gigafactory car plant is located in Shanghai, so it is not averse to accessing local cloud resources.

According to MIIT, in total, in September 2024, 2.2 thousand companies with foreign capital received licenses to conduct telecommunications activities. Plans to lift restrictions on investment in local services were first announced in April 2024. Previously, foreign investors could only own up to 50% of a local telecommunications business.

The new measures will allow American companies like Microsoft and AWS, which previously worked only through intermediaries, to build their own data centers in China. However, development will certainly be affected by sanctions limiting the supply of modern chips to China. In August, it was reported that AWS, Microsoft and Google are leading the cloud market in all regions of the world except China. Earlier this year, Vietnam took similar steps to open the data center market to foreign investors. In July, the country officially lifted the rule that foreign companies could own no more than 49% of a business.