Industry Insights | The domestic data center industry is undergoing a comprehensive evolution, with a shortage of supply in key cities

A Data Center (DC) is a building that provides an operating environment for centrally placed electronic information equipment. As an important component of computing infrastructure, it serves as the data hub and computing carrier supporting the development of new-generation digital technologies such as 5G, artificial intelligence, and cloud computing, playing a significant role in boosting digital economic growth.

According to various properties or service targets, data centers can be divided into Internet Data Centers (IDC) and Enterprise Data Centers (EDC). IDCs utilize corresponding computer room facilities to provide users with servers and other internet or network-related equipment with placement, proxy maintenance, system configuration, and management services through outsourced rental arrangements. They also offer rental of database systems or servers, as well as storage space rental, proxy leasing of communication lines and outbound bandwidth, and other services. EDCs, on the other hand, are constructed and owned by enterprises/organizations and serve their own businesses.

According to the 'Guiding Opinions on the Construction and Layout of Data Centers' jointly issued by five ministries and commissions including the Ministry of Industry and Information Technology, data centers can also be classified by scale into: super-large data centers (n≥10,000), large data centers (3,000≤n≤10,000), and small and medium-sized data centers (n<3,000).

Benefiting from the rapid development of mobile internet and national strategic policies such as new infrastructure and digital economy, the market scale of data centers in China has increased from nearly 122.8 billion yuan in 2018 to nearly 268.6 billion yuan in 2021.

Driven by the demand stimulus brought about by the COVID-19 pandemic, there has been a significant number of data centers planned and approved domestically in recent years. The period from 2021 to 2023 will be a breakout phase for the deployment and production of data centers; with a focus on large-scale data center construction, edge computing data centers will also begin to gain momentum. Therefore, it is estimated that by 2024, the domestic market size for this sector could reach 496 billion yuan.

According to statistical data, the total number of standard racks in use in China's data centers exceeds 4 million (with large and above data centers accounting for more than 75%), with a total computing power of about 90 EFLOPS; by the end of 2024, the annual average growth rate of data center rack scale nationwide will remain at about 20%.

The construction of data centers in our country generally maintains a supply-demand balance, and their distribution is strongly correlated with the economy, population, and digital consumption.According to Frost & Sullivan data, North China accounts for nearly 30% of the national market share, East China nearly 25%, South China nearly 25%, and the western region nearly 20%. In 2021, the average listing rate in China was about 50.1%, with significant differences in listing rates between provinces. The eastern region has an overall higher listing rate, with the top five provinces and cities being Shanghai, Beijing, Guangdong, Zhejiang, and Hebei. This reflects that these regions still have significant demand space at this stage.

Regionally, the domestic network topology determines that Beijing, Shanghai, the East China Yangtze River Delta, Guangzhou-Shenzhen, and the South China Pearl River Delta are core network nodes. However, there is a clear imbalance between supply and demand in these key data center clusters.The extremely high listing rates in key cities such as Beijing, Shanghai, Guangzhou, and Shenzhen also reflect the significant supply-demand gap that still exists within the region at this stage. There have been continuous regional supply-demand gaps of 20% to 25% in Beijing, Shanghai, Guangzhou, and Shenzhen, with current demand gaps of 91,000, 94,000, and 107,000 respectively, and there is still a trend of expansion.

• Beijing and its surrounding areasThe market growth rate is gradually slowing down, and the PUE restriction policy is the strictest in first-tier cities. In the future, more than 80% of new cabinet resources will be concentrated in suburban areas outside the central urban districts of Beijing, such as Langfang, Zhangjiakou, and Wuqing District around Beijing.

• Compared with Beijing,Shanghai and the surrounding areas of the Yangtze River DeltaFor data centers, management is relatively loose; however, due to cost reasons, customer demand is still spreading to other surrounding cities in the Yangtze River Delta, and the number of approved indicators has also significantly declined.

• Guangzhou-Shenzhen marketThe scale has achieved the fastest growth among key cities, with the supply side mainly consisting of operator data centers. However, due to existing cabinets exceeding the planned capacity, there may be a short-term oversupply in the region.

In recent years, due to the high energy consumption characteristics of IDCs, supply policies have become stricter in key domestic cities constrained by scarce land and power resources. Beijing, Shanghai, Shenzhen, and Guangzhou have successively issued restrictive policies for new construction and expansion of IDCs to achieve energy conservation and emission reduction targets, mainly reflected in the threshold set for PUE indicators.