China is developing a network to sell computing power from a data center building boom over the past three years.

After local governments backed facilities across the country, overcapacity concerns have plagued the Chinese data center market. Reuters reports that the state is now looking into setting up a national, state-run cloud service using the surplus compute.

The Ministry of Industry and Information Technology (MIIT) is collaborating with China's three state telecoms companies (China Mobile, China Unicom, and China Telecom) to create a single platform.

At a conference last month, Chen Yili, deputy chief engineer at the China Academy of Information and Communications Technology, said that the government could standardize interconnection of public computing power nationwide by 2028.

The 'Eastern Data, Western Computing' initiative, launched in 2022, had hoped to shift computing to the energy-cheap West, to support Eastern population hubs. But it instead caused facilities to spring up in places that they are not used, with many failing to hit the sub-20ms latency to the East that the initiative had called for.

Reuters reports that the Chinese government estimates data center utilization to be around 20-30 percent. While 11 local state-backed data center-related projects were canceled in 2023, that number passed 100 over the past 18 months.

Last week, Chinese President Xi Jinping voiced his concerns over different provinces all chasing the same trends. "When it comes to projects, there are a few things — artificial intelligence, computing power, and new energy vehicles," he said at the Central Urban Work Conference in Beijing.

"Do all provinces in the country have to develop industries in these directions?"