China Opens Data Centre and Internet Services to Full Foreign Ownership in Four Pilot Zones, 166 Licences Issued

HIGHLIGHTS

China's Ministry of Industry and Information Technology said on Wednesday that 166 foreign-invested enterprises have received licences to operate value-added telecom services since February 2025, under a pilot programme that removes foreign equity caps on businesses including internet data centres, internet access services, and information services.

The pilot operates in four locations — Beijing, Shanghai, Hainan, and Shenzhen — and represents a regulatory shift for a sector where foreign ownership has historically been constrained by licence conditions and equity ceilings. Under the trial, foreign investors can hold a controlling or wholly-owned stake in internet data centre and related value-added service operations within the designated zones, a change that brings China's telecom opening commitments beyond the terms of its WTO accession schedule and earlier free trade zone liberalisation measures.

The MIIT figures are cumulative. Since the first batch of approvals was issued in February 2025, licences have been granted at an average pace of roughly 10 per month. The 166 approved enterprises can legally provide services across the full geography of China, not only within the four pilot zones — a commercial footprint that the licence structure has historically made difficult for foreign operators to achieve without joint venture partners or contractual arrangements.

The broader telecom market context is instructive. As of June 2026, more than 3,100 foreign-invested telecom enterprises are registered in China, and their operations now span all 10 categories of value-added telecom services listed in the national telecom classification catalogue. The pilot programme adds a further layer: it permits foreign-majority or wholly-owned entities in specific subsectors — data centres, internet access, and information services — where foreign participation was previously limited to minority stakes or required local partners.

For global cloud service providers, data centre operators, and internet infrastructure firms, the pilot changes the legal form through which Chinese market exposure can be held. A wholly-owned data centre operation in one of the four pilot zones provides direct control over infrastructure, security protocols, and service delivery, in contrast to the contractual and joint venture structures that have historically mediated foreign access to China's internet infrastructure market.

The MIIT signalled that additional policies are forthcoming, with the stated intent of encouraging eligible foreign-invested enterprises to enter China's telecom market. The direction of travel — from WTO commitments through free trade zone experiments to nationwide foreign-invested telecom enterprise coverage — suggests the pilot programme may serve as a template for broader liberalisation rather than a one-off exemption. The commercial question for foreign operators is whether the licences now being issued are precursors to a national regime that removes equity caps entirely, and at what pace.