The State of China's Government Cloud
Defining China's government cloud, examining its market, and glancing into its future
The past few months have seen increased discussion of China’s “government cloud” (政务云), its surrounding market, and its future growth. Here are several highlights, which we’ll explore in more detail later:
In June, the State Council declared that China should build an integrated government cloud platform from existing regional government cloud resources.
A handful of reports released this month by different organizations analyzed the upward growth of China’s government cloud market.
On August 23, Huawei Cloud snagged a meaty contract for building out Changsha’s government cloud.
What’s government cloud?
The term “government cloud” (政务云) generally refers to the comprehensive cloud-driven systems used by China’s regional government bodies (e.g. at the provincial or city level). In this article, “government cloud” is typically used in a collective sense to refer to this concept.1
A brief history of government cloud
We can see the beginnings of China’s government cloud in the Outline of the Twelfth Five Year Plan for National Economic and Social Development, published in 2011:
Vigorously advance the development of the country’s electronic governance. Strengthen the development of cloud computing platforms, and build the next generation of informational infrastructure.
However, official promotion of work on government cloud projects began when the Ministry of Industry and Information Technology (MIIT) published the Guide for the Top-Level Design of a Cloud-Based Public Electronic Government Platform in 2012.2
Jumping ahead to 2015, the concept of government cloud was discussed with a greater sense of urgency in a State Council document titled The State Council’s Views on Promoting Innovation and Development in Cloud Computing and Cultivating a New State of the Information Industry:
Explore new models for the development of cloud computing in electronic governance.
Encourage the application of cloud computing technology in integrating and transforming current electronic government information systems. Achieve the deployment and the shared development and use of government information systems in all fields. Substantially decrease the number of government-built data centers. New electronic government systems must pass a strict evaluation of feasibility and receive approval.
Government departments must increase their efforts to procure cloud computing services, proactively launch pilot programs and demonstrations, explore new mechanisms of cloud-based development and operation for government informatization, promote the sharing of government information resources and the coordination of work, promote the simplification of government agencies and the delegation of administration to enterprises,3 and strengthen supervision on projects both before and after their completion. These departments must create a larger market space for cloud computing and drive rapid development in the cloud computing industry.
The government cloud market
The last paragraph in the passage above is representative of how China’s regional developments have built out their government clouds in recent years: by leveraging the strength of China’s cloud market to build its administrative infrastructure.
In China, government cloud makes up a significant and growing part of the national cloud market. Just as private companies like AWS provide cloud services to the United States government on the federal, state, and local levels,4 private Chinese cloud companies such as Alibaba Cloud, Tencent, and Huawei offer specific products and services catered toward government clients.
One example: Huawei just won a CNY 287 million bid on August 23 (yesterday, at the time of publication) to build the cloud services portion of Changsha’s government cloud.5
However, to understand the current state of China’s national cloud market and its projected future, we need to examine one more piece of the puzzle: the State Council’s recent call for a nationwide government cloud platform.
Building an integrated government cloud
In June of this year, the State Council published Guidance on Strengthening the Development of a Digital Government. As the title indicates, the document concerns the growth of China’s digital government (数字政府), an umbrella term for digitized government administration and development that encompasses areas such as regional government clouds, smart centers, industry applications, city brains, and security.
As summarized by Xinhua, the document discussed “taking the initiative to seize the momentum of the digitalization of the country’s economy and society to fully reap the dividends of digitalized development and launch a brand-new phase of the development of a digital government.”6
Section 6.1 of the State Council document, titled “Strengthen the supporting capacity of government cloud,” details a new vision for China’s government cloud. At the core of this new vision is an integrated national government cloud platform.
Relying on the country’s integrated government big data system, plan the integration of current government cloud resources to construct an integrated national platform for government cloud systems. Complete the unified planning for the development of government cloud resources, as well as the interconnectedness and intensive sharing of these resources.
Comprehensive administrative preparations will be made for incorporating the government clouds of each department of the State Council into an integrated national government cloud platform. Each region will launch the development of a government cloud at a provincial level and provide intensive government cloud services. Explore the establishment of a unified management mechanism for government cloud resources, and strengthen management and administration for the resources of a unified government cloud platform.
While it’s certainly too early for the State Council’s goal of a national government cloud to be anywhere near fruition, these plans add important context to the future of government cloud, especially as planning for the construction of a digital economy has already begun at a regional level across China.7
In the final section below, we’ll examine the two recent reports discussing China’s government cloud market, its current trends, and its future.
The government cloud market’s present and future
This month, two reports were released discussing the state of China’s government cloud market and its outlook. One was published by the private industry consulting company China Business Research Institute (CBRI).8 The other was published by the China Academy for Information and Communications Technology (CAICT), a think tank affiliated with the MIIT.
Regarding the market as a whole, the CBRI report9 report had the following to say:
As a result of tighter finances and the squeeze on the government’s informatization spending caused by anti-COVID measures, the overall government cloud market experienced slower growth in 2021. As the digital government prepares to enter a stage of deeper development,10 demand for the supporting capacity of government clouds will rise accordingly, and the government cloud market will enter an opportune period for development. In 2021 the scale of the government cloud market reached 42.716 billion yuan, displaying year-on-year growth of 21.47%.
However, the CAIC report11 provided much larger figures — it pinned the 2021 government cloud market at 80.26 billion yuan (double the CBRI figure) and estimated a total of 120.39 billion for 2023. Measured against the CAIC's figure of 322.9 billion for the 2021 cloud market,12 this would pin the scale of China's government cloud market at about 37.3% of the national cloud market as a whole.
Due to these conflicting figures, I do not claim that any figures in the below excerpts are authoritative (although I would lean towards CAIC due to its relationship with the MIIT). Instead, by comparing the 2021 figures with the estimates for 2022, one can gain a sense of the anticipated growth for the government market as a whole, as well as each subsection of the market.
Niches in the government cloud market
The CBRI separates China’s government cloud market into three distinct submarkets: 1) dedicated cloud infrastructure, 2) public cloud infrastructure, and 3) cloud services and operations.
Below are its summaries of each slice of the market.
Dedicated cloud infrastructure
Spurred by multiple favorable policies for cloud infrastructure, the market for dedicated government cloud infrastructure reached 30.84 billion yuan in 2021, showing a year-on-year growth rate of 20.85%. It’s estimated to reach 36.1 billion yuan in 2022.
Government-purchased services have gradually become the mainstream means for building out this infrastructure. Governments have increasingly favored purchasing cloud services, preferring to hire professionals to complete these tasks.
With this context in mind, the proportion of dedicated cloud service work has continued to rise; at the same time, gradually fewer governments have chosen to go the way of building government clouds on their own after procuring cloud infrastructure. The focus has been on key vertical industries and fields.
Public cloud infrastructure
The market for public government cloud infrastructure reached 6.668 billion yuan in 2021, showing a year-on-year growth rate of 23%. This is estimated to reach 7.6 billion in 2022.
In light of increasingly abundant government-facing services offered by the public, as well as the continuously increasing depth of new technological applications such as big data, AI, and spatial data, PaaS (platform as a service) and SaaS (software as a service) development has spurred the consumption of IaaS (infrastructure as a service) resources. The public cloud infrastructure market for government clouds continues to increase in scale.
Cloud services and operations
The services and operations market for government cloud reached 5.208 billion yuan in 2021, showing a year-on-year growth rate of 23.3%. It’s estimated to reach 6.3 billion in 2022.
With the continued intensification of the development of the digital government and the more comprehensive development of government cloud infrastructure, service operations will become a core element of government cloud development in the future. Aspects such as situational operations, efficient big data management, and granular services will become key motivators for the continued growth of the service and operations market for government cloud.
The CAIC report concisely summarizes its forecast of strong growth for the government cloud market:
As the foundation for resource consolidation and sharing, as well as for the development and deployment of professional systems, government cloud will continue to see stable growth in the future.
This same report also stressed the foundational work currently being planned and carried out across China for its digital government, which is important to keep in mind. The country’s regional government clouds play a crucial role in China’s plans for digital government, especially in light of the State Council’s recent directive to build an integrated national government cloud platform.
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As will be discussed in more detail later, the State Council recently proposed the creation of a unified platform linking regional government clouds. To avoid confusion, this unified platform will be referred to as the “national government cloud.”
While I was unable to track down an official source for the document’s contents (the MIIT site only mentions the guide by its title in a single hosted article), I did find a WeChat post from 2014 containing a fair chunk of text that appears to check out. From the opening paragraph: “This guide has been made specifically to implement [multiple central government plans and positions]; make the most of existing resources and the potential of new-generation information technology; launch the top-level development of a cloud-computing-based public electronic government platform; continue to intensify the application of electronic governance; and increase the overall level and abilities of electronic government services.”
This is a translation of the much more succinct phrase “简政放权,” which gained prominence through its use by Li Keqiang beginning in 2013, two years before this State Council document was published.
For reference, here are AWS’s pages for their federal services and their state and local services. You might also be interested in this 2018 AWS talk titled “Cloud is the new normal in government — now what?”
Also known as “askci” (Chinese name: 中商产业研究院).
All details on the CBRI report are taken from the previously cited Sina article, which was posted by CBRI’s account: 2022年中国政务云市场规模及细分市场预测分析.
As discussed in the previous section.
A summary of the report is provided in the following report by 21st Century Business Herald, published by Sina Finance: 报告：2023年我国政务云市场规模将达到1203.9亿元 (August 16, 2022).