China's cloud market to triple by 2027, says govt think-tank

China's cloud market is growing faster than the global average and is expected to more than triple over the next three years, according to government think-tank CAICT.

The Chinese market totalled 616.5 billion Chinese yuan (US$85.5 billion) last year, up 35.5%, CAICT said in its annual cloud industry report.

It is forecasting another 36% growth this year and predicts a market size of more than RMB2.1 trillion ($293 billion) by 2027.

Despite the large size of its economy and the hectic growth rate, however, Chinese cloud remains a small part of the global market.  

CAICT quotes a Gartner number of $586 million for global cloud revenue last year – with growth of 19% – which gives China a 14.5% share of the market. Analyst firm Canalys (a sister company of Light Reading) estimated China's infrastructure as a service (IaaS) and platform as a service (PaaS) services accounted for just 12% of the worldwide total in Q2 2024.

CAICT says public cloud accounted for 74%, or RMB456.2 billion ($63.6 billion) of total spending last year, a 40% increase, with private cloud growing at 21%.

China's cloud industry leans heavily toward IaaS and PaaS, in contrast with the global market, where SaaS is the biggest segment, accounting for 37% of public cloud revenue last year.

PaaS on a fast track

The fastest-growing Chinese cloud service is PaaS, boosted by AI-related demand to expand by 75% last year to RMB60 billion ($8.4 billion), overtaking SaaS, which grew just 23% to RMB58 billion ($8.1 billion).

IaaS was the largest segment, worth RMB338 billion ($47.1 billion) in 2023, up 39% year-over-year.

According to CAICT, Internet and ecommerce companies were the biggest single source of cloud customers, accounting for 31%, followed by government affairs on 22% and financial services on 10%. China's world-leading manufacturing sector, despite its size, represented just 8% of cloud spending.

The rankings of the top six IaaS providers were unchanged from 2022. China Mobile, which registered the fastest growth, ranked third with a 13% market share, with Alibaba once again in the lead with 21% of the market. China Telecom Tianyi Cloud (17%) placed second, with Huawei (9%) fourth, followed by Tencent (7%), and China Unicom (4%).

In the PaaS market, Baidu leapt from sixth to second placed behind Alibaba, followed by Huawei, Tencent, Tianyi and China Mobile.

The CAICT report stressed the high priority the government places on building the cloud industry, which it regards as key to its plans for “high quality” technology-driven economic growth.

It cites multiple measures by the MIIT and other departments to stimulate cloud industry growth, as well as dozens of government cloud projects at city and provincial level.

But in spite of the recent ramp up in investment and the government jawboning, China’s cloud infrastructure and services remain overwhelmingly based in the wealthier eastern and southern provinces, the report reveals.

CAICT has scored each region's cloud-readiness, with Beijing and Guangdong province taking the top spots with more than 90 points each, but 11 provinces totaled 10 points or less, with Tibet at the bottom with 4.3.