China Launches Pilot for Foreign-Owned Data Centers

The Ministry of Industry and Information Technology’s initiative will establish specific zones where foreign-owned facilities can offer digital infrastructure services to local companies.

Jin Zhuanglong, the Minister of Industry and Information Technology, noted that the pilot program represents a new phase in China’s efforts to open up the telecommunications sector.

Previously, foreign investors faced restrictions on owning and operating data centers in China, with local regulations limiting ownership to domestic companies. Foreign firms were only allowed to participate through joint ventures with local partners, with ownership capped at 50% in any consortium.

The project will permit foreign investors to invest in value-added telecom services within four specified regions: Beijing, Shanghai, Hainan, and Shenzhen. Businesses in these designated areas can operate as wholly-owned ventures, providing data and transaction processing services.

Wang Zhiqin, Deputy Director of the China Academy of Information and Communications Technology, stated that the pilot program aims to enhance the integration of digital technologies across various sectors nationwide.

The project is part of China’s broader efforts to open up its services sector, including establishing free trade zones like the 120-square-kilometer Lin-gang Special Area.

Chinese state media reported that 2,220 foreign-invested firms are licensed to operate telecom services within the country, as new pilot programs seek to boost foreign investment opportunities.

The Ministry of Industry and Information Technology announced plans to closely monitor the pilot initiatives and may widen their scope when the time is right.

HSBC’s Chinese fintech subsidiary is already aiming to capitalize on the program, having reportedly applied for an internet content provider license.