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Chinese Government to Invest $1 Billion to Drive Cloud Development

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The Chinese government plans to make more than $1 billion available over the next few years to drive cloud computing development, according to a new paper commissioned by the US-China Economic and Security Commission.

“Red Cloud Rising: Cloud Computing in China”, written by the Center for Intelligence Research and Analysis, predicts that this investment would allow China’s cloud industry to reach $163 billion by 2015.

Some of the challenges preventing the Chinese cloud industry from growing at this rate include low reliability and energy efficiency in domestic data centers, lack of innovation in core chip development, and inadequate visualization support.

This report comes as Gartner predicts that IT spending in China will reach $323 billion in 2013, presenting substantial opportunities for service providers.

Unlike the US, the report said that “Chinese state guiding documents show no indication that technical requirements for Chinese government cloud computing requirements will ever be shared publicly.” In addition, Chinese policies around cloud computing standards look to create “‘indigenous innovation’ requirements for domestic sales of cloud computing technology in order to protect Chinese enterprises from foreign competition.”

While the Chinese government has imposed limits and restrictions on foreign investment in value-added telecommunications services, US companies can enter the Chinese market through joint partnerships in order to provide cloud services to Chinese consumers from data centers in China. For example, Microsoft partnered with 21Vianet. The partnership, according to the report, “raises a potential security risk for Windows Azure users who have no business in China whatsoever, a risk stemming not from technical vulnerabilities but from the Chinese government itself.”

Even smaller scale requests for sensitive information could be an issue, according to the report; “Microsoft has found itself compelled to provide the Chinese government with full source code for Microsoft Windows and other core products, which may have enabled the PLA and Chinese intelligence services to more effectively penetrate and exploit foreign systems and infrastructure.”

The full report is available here.

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About the Author

Nicole Henderson is the Editor in Chief of the WHIR, where she covers daily news and features online. She has a bachelor of journalism from Ryerson University in Toronto. You can find her on Twitter @NicoleHenderson.

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