What is China's "National Cloud"?
Examining this initiative to strengthen China's cloud ecosystem for state-owned enterprises
The buzzword “national cloud” has popped up across China’s tech ecosystem over the past few weeks, from mainstream media outlets to popular WeChat articles. However, the definition of the national cloud is much more nuanced than its name implies. Far from being a public cloud infrastructure project, the national cloud is specifically focused on China’s state-owned enterprises.
This week I aim to summarize what the national cloud is and why it matters. In addition, I’ll cover its greater context and what the future may hold for it.
The emergence of the “national cloud”
The recent discussion of a “national cloud” project can be traced back to a meeting held by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) on July 12.
The SASAC meeting discussed the state of the consolidation of work and resources among centrally managed state-owned enterprises (SOEs); the meeting’s main points were later summarized in a detailed WeChat article published by SASAC’s own official account that same day.
This article contains two instances of the phrase “national cloud.” First, it mentioned that state-owned telecommunications giant China Telecom had created a national cloud company after receiving contributions from strategic investors at SOEs. Second, it mentioned that China Telecom’s Tianyi Cloud would provide the framework for this national cloud.
Excitement is palpable in some of the online responses to the SASAC meeting. A WeChat article from mid-July with over 90,000 views titled “Is the National Cloud Really Coming?” eagerly remarked on the SASAC WeChat post mentioned above:
A realization hit us when we saw that section [about China Telecom forming a national cloud company]. The “national cloud” actually exists. Not just that — it’s marching ahead accompanied by an intense publicity campaign, and one of the parties taking the lead is China Telecom.
However, many online seem to have latched onto the “national cloud” buzzword in the wake of the SASAC meeting without fully understanding the term’s meaning. Chinese tech and business outlet TMTPost remarked on this phenomenon:
Perhaps unintentionally, the emergence of the phrase “national cloud” elicited boundless speculation. Was it real? Was it fake? Without an official explanation, the “national cloud” became a catalyst to stir up the emotions of the market, like the “state-owned enterprise cloud”1 before it.
Defining the national cloud
While the name “national cloud” may seem to imply a monolithic cloud platform stretching across China, it would be more accurate to describe it as a self-contained cloud ecosystem confined to a specific niche. Created under the guidance of SASAC, the national cloud aims to promote the consolidation of cloud computing resources for state enterprises.
With this understanding in mind, let’s go back and examine both mentions of the phrase “national cloud” from the original WeChat article posted by SASAC.
Under a section titled “Vigorously promote the advancement of innovation in science and technology,” the article outlined the recent accomplishments of several state-owned companies, including China Telecom:
China Telecom brought in contributions from strategic investors at different state-owned enterprises to create a national cloud company; planned the deployment of a system incorporating technological innovation, the building of new installations, and security and prevention; and accelerated the construction and advancement of an ecosystem of original cloud technology.
Directly after this passage is a much meatier section discussing the “five focuses” (五个聚焦) that SASAC encourages state-owned enterprises to uphold:
Focus on one’s primary duties and occupation, and focus on cultivating a superior business. Speed up the effective consolidation of resources among state-owned enterprises.
Focus on improving core competitive strengths, and drive in-depth consolidation and fusion within the company.
Focus on expressing the functions of one’s platform; let industrial groups work in collaboration with investors and businesses.
Focus on optimizing resource allocation within a greater scope; promote organic links between state-owned enterprises and external resources.
Focus on increasing the efficiency and efficacy of consolidation, and develop more innovative ways of working.
In the next section, SASAC lists the actions carried out by six different organizations, including China Telecom. This section features the article’s second and final mention of the national cloud:
China Telecom has focused on its “cloud revolution, data transformation” development strategy. Using professional consolidation as its starting point, it has created a “one cloud, two wings”2 task group. In their work on the development of a digital society, they brought in strategic investments from state-owned enterprises — namely, China Electronics Corporation (CEC), China Electronics Technology Group Corporation (CETC), China Chengtong Holdings Group, and China Reform Holdings Corporation — and established the diversified-equity business Tianyi Cloud Technology Company, Ltd., actively promoting the consolidation of cloud computing resources.
By intensifying its coordinated research and development with state-owned enterprises such as CEC and institutions of higher education such as Tsinghua University, China Telecom has built a completely autonomous and controllable ecosystem of original cloud technology.
Consolidating its internal resources, the Tianyi Cloud Company set up 31 provincial subsidiary companies and established a robust integrated cloud network operations system. Tianyi Cloud is currently the world’s largest telecommunications carrier cloud and China’s largest hybrid cloud; it is acting as the basic foundation for the national cloud’s framework.
The debut of the national cloud
At the end of last month, it was announced that China’s first state-owned asset administration and supervision cloud service had officially gone online. The news was announced at the 2022 Cloud Ecosystem Conference, which was held at the Fifth Digital China Development Summit in Fuzhou. The conference was jointly organized by SASAC, the Standing Committee of the Fujian Province People’s Congress, China Telecom, CETC, and CEC. Among other events, the conference included a ceremony announcing that the state-owned enterprise cloud had gone online.3
Multiple media sources4 called this cloud platform the debut of the national cloud, as this effort was primarily carried out by the China Telecom-led “national cloud team” described above.
Understanding the context of the national cloud
From a more narrow scope, the national cloud ties into the “five focuses” promoted by SASAC, particularly the first focus: consolidating resources among state-owned enterprises. However, work on the national cloud also exists in the context of a long-term national push to increase the scale of cloud computing in China.
Recent core policy documents pushing for increased cloud adoption (and highlighting the importance of cloud computing to China’s governing bodies) include the State Council’s Outline of the People’s Republic of China 14th Five-Year Plan for National Economic and Social Development and Long-Range Objectives for 2035, the State Council’s 14th Five-Year Plan for the Development of the Digital Economy, and the 14th Five-Year Plan for the Development of the Software and Information Technology Service Industry published by the Ministry of Industry and Information Technology (MIIT).
For state enterprises, cloud adoption is an important means of speeding up technological innovation. In a recent report about the launch of the state-owned asset supervision and management cloud, Communications News Report offered some perspective on the digitalization of state enterprises:
The massive demand for technological applications caused by the accelerated increase in the “cloud adoption index” among state enterprises can spur a large-scale increase in the use of China’s fundamental technologies and products, bringing about an effective balancing of supply and demand, as well as increasing the overall effectiveness of the “tech innovation chain.”
The “cloud adoption index” is an important engine in promoting the digital transformation of state enterprises…
In recent years, China has continuously advocated for the digitalization of businesses and encouraged companies to “get on the cloud.”
…In September of 2020, SASAC published A Notice Regarding Accelerating the Work of Digitalization at State-Owned Enterprises, which suggested “accelerating the pace of cloud adoption at businesses” and illuminated a path for digitalization at state enterprises and state-owned enterprises. According to the 48th Statistical Report on the Development of China’s Internet published by CNNIC, it’s predicted that the cloud adoption rate among the government and large businesses will jump from 38% in 2019 to 61% in 2023. One can see that cloud adoption among state enterprises has already become the most important digitalization work for companies handling state-owned assets and that the “cloud adoption index” for state-owned businesses has already entered a period of acceleration.
China Telecom in particular has been making strides in cloud computing for over a decade. The China Telecom Cloud Computing Company was formed in 2012, four years before the launch of China Telecom’s flagship cloud product Tianyi Cloud.5 At the recent Fifth Digital China Development Summit, the company also presented some of its other recent achievements in the field of cloud computing, such as a cloud-based SaaS platform meant to guide state-owned enterprises in migrating applications to the cloud.6
The national cloud’s future
The next step is for state-owned state asset management companies to actively take part in the construction of a cloud system; they should become the operators of a foundational national public cloud, pioneers making breakthroughs in core technologies, and forerunners in the building and operation of a public and domain-focused cloud. In addition, they should become the pillars of a national network and information system and the guardians empowering all of society to securely use the cloud.
An article by TMTPost published after the Fuzhou summit discussed how the national cloud could affect the competitiveness of China’s cloud market. The article mentioned that while the national cloud’s advantages may only apply to a few niche markets for now (specifically related to state-owned enterprises), the national cloud would affect other clouds linked to state-owned enterprises, such as China Mobile and China Unicom, as well as domestic clouds such as Alibaba Cloud and Tencent Cloud. However, the national cloud would likely not affect foreign cloud enterprises and domestic cloud companies focusing on overseas markets. TMTPost also speculated that China Telecom’s leading role in the national cloud could paint a target on the company’s back.
While it remains to be seen whether the national cloud initiative will scale to match Weng Jieming’s lofty hopes, the launch of projects such as the state enterprise cloud point to the effectiveness of the national cloud’s momentum. As mentioned earlier, it’s also an example of a larger trend of cloud adoption among government bodies and state-owned enterprises.
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The “state-owned enterprise cloud” (国资云) refers to a “data management system and cloud platform which at its core consolidates data from state-owned enterprises.” (Source: Baidu Baike)
Interestingly, the phrase “one cloud, two wings” was originally used by Huawei to refer to a cloud-based project as early as 2019. The full name of the project was “one cloud, two wings, dual engine,” and the “wings” referred to smart computing tasks and smart data and storage tasks. (In the context of the China Telecom project, there may also be some wordplay here, as the “Tianyi” in China Telecom’s Tianyi Cloud means “heavenly wing.”)
Information taken from Baidu Baike. The page contains a link that originally directed to China Telecom Cloud’s website but now redirects to the home page for Tianyi Cloud.