How the trade war could impact China's big data hub Guizhou

May 14, 2019 13:10
Guizhou's future is closely tied to the outcome of the US-China trade talks. Photo: Xinhua

I visited Guizhou again last week, and was so impressed by the local big data and tourism industry developments there.

The remote province in southwestern China used to be poor and lagging far behind other regions in economic growth.

To boost Guizhou’s economy, the central government committed to make Guizhou China’s big data hub in 2014.

The provincial government offered various preferential measures in taxation, land, electricity bill, talent, etc. As a result, leading tech companies like Apple, Microsoft, Tencent, and Alibaba all have set up their data centers in Guizhou.

Transportation used to be a big hurdle as the mountainous province is largely isolated from the outside world.

But following the construction of a high-speed railway, tourism in the province took off. Partly as a result of the big data boom, Guizhou’s GDP growth rate is the fastest in the country.

Rapid growth has attracted young talents from all across China. The provincial capital city of Guiyang has the nation’s youngest population, surpassing startup hubs like Shenzhen and Hangzhou.

On the day I arrived in Guiyang, US President Donald Trump twitted that Washington would increase tariffs on US$200 billion of Chinese goods to 25 percent from 10 percent.

Almost everyone in the city I met was talking about the US-China trade dispute, which is understandable, considering that Guizhou’s future is closely tied to the trade talks.

Any escalation of the trade war would have an impact on two things at least.

One of Washington's key demands is for China to further open up its market to foreign companies like Google and Facebook. If that happens, more tech giants are likely ti set up their data hubs in Guizhou.

But if the two sides fail to reach a deal, tech firms like Apple and Microsoft may have to scale back their business in China, hurting the data center industry in Guizhou.

Also, the provincial government has signed a deal with California-based Hyperloop Transportation Technologies to build a track for a futuristic high-speed transportation system in Guizhou’s eastern city of Tongren.

In the hyperloop project, which is expected to cost about 10 billion yuan (US$1.45 billion), key parts of the control system will have to be imported from the US. The project could be stalled by the worsening trade relationship.

This article appeared in the Hong Kong Economic Journal on May 10

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist