Market reaction
Shares of GDS Holdings (NASDAQ:GDS) and Vnet Group (NASDAQ:VNET) climbed by about 8% on Tuesday following reports that China plans to invest roughly 2 trillion yuan, equivalent to $295 billion, over the next five years to build a nationwide network of data centers. The gain was recorded in the American depositary receipts of the two Chinese cloud providers.
Scope of the plan
People familiar with the matter told reporters that several key government bodies, among them the National Development and Reform Commission, are working on a blueprint to establish interconnected computing hubs across the country. The reported investment timeframe covers the next five years.
Operational expectations
Sources said state-owned enterprises, including China Mobile and China Telecom, are expected to operate the majority of the proposed facilities. Those people also cautioned that the blueprint is still at an early stage of discussion and that particulars could be altered as planning advances.
Strategic rationale
According to the same accounts, the proposed expansion is aimed at strengthening the infrastructure needed to support China's development in artificial intelligence. The scale of the investment would represent a notable enlargement of the country's data center footprint.
Broader market moves
The news lifted other technology-related stocks as well. Alibaba ADRs were reported up 0.4%, while Baidu moved higher by about 1.5%.
Caveats and outlook
Observers should note that the data center blueprint is described as being in early talks and that reported details are subject to change. The reported five-year horizon means implementation and outcomes may evolve over time as plans are refined or adjusted.
Note: This article presents reported plans and market reactions as described by people familiar with the matter. The plan’s timing, scope and operational arrangements are as reported and remain under discussion.