48 IT Pro May/June 2013 P u b l i s h e d b y t h e I E E E C o m p u t e r S o c i e t y 1520-9202/13/$31.00 © 2013 IEEE

Feature: Cloud Computing

Wai-Ming To and Linda S.L. Lai, Macao Polytechnic Institute, PR China

Andy W.L. Chung, XNT Limited, PR China

Many cities in China are seeking to establish cloud computing facilities for public and business services. However, despite large investments in the cloud, there are still several barriers to strategic cloud deployment in China.

According to cloud computing advocate Tom Leighton, the cloud will “trans-form the way IT is consumed and managed, with promises of improved

cost efficiencies, accelerated innovation, faster time-to-market, and the ability to scale applica-tions on demand. While the market is abundant with hype and confusion, the underlying poten-tial is real—and is beginning to be realized.”1 To get ahead technologically in this area, China’s government and private enterprises are invest-ing heavily in cloud computing, and China shows exceptional promise in this area. However, sus-tained success will require addressing three main barriers.

Investing in the CloudAccording to the Asia Cloud Computing As-sociation, investments in cloud computing in China will amount to US$154 billion in the next few years, as companies begin to expand

their use and offering of cloud services.2 Major corporations—including China Telecom, China Unicom, and China Mobile—are developing cloud computing services to meet customer needs.2 One of the biggest investors in cloud computing, China Mobile, is expected to spend $52 billion by expanding cloud services nation-wide in the next three years.2

Yet cloud computing isn’t only for big businesses. Increasingly, small and medium enterprises (SMEs) are seeking cloud services to reduce their operating costs and expand their operational capacity.3 Some companies, including NetApp and International Data Corporation, have en-tered China’s cloud computing market specifi-cally to provide services to SMEs.3

Domestic companies also operate in the cloud computing market. For example, Beijing Com-puting Centre recently established a cloud stor-age pool (in partnership with Hitachi) to meet the growing storage demands of its customers.3

Cloud Computing in China: Barriers and Potential

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Between the growth in the large company mar-ket and the expanding interest from SMEs, cloud computing is clearly going to be a big business.

Pilot ProjectsAccording to X.Q. Zhang, vice minister of the China National Development and Reform Commission, five cities—Beijing, Shanghai, Hangzhou, Wuxi, and Shenzhen—have been se-lected to pilot the development and use of cloud computing-related technologies.4 Private enter-prises, such as Baidu, China Mobile, and Lenovo Group, are the main participants in the Beijing Xiang Yun (“Clouds of Blessing”) project, which focuses on cloud storage and search, primarily working in the infrastructure-as-a-service domain.

Shanda Interactive Entertainment and China UnionPay are the main participants in the Shanghai Yun Hai (“Sea of Clouds”) plan, which focuses on cloud computing for the cultural sec-tor and for electronic payments and commerce. According to the “2010–2012 Shanghai Plan for Promoting the Cloud Computing Industry,” Shanghai is striving to become the “Asia-Pacific Cloud Computing Center.”5 Moreover, with its “10-100-1,000 Cloud Computing Project,” the city hopes to cultivate

•10 cloud computing enterprises with annual incomes of more than 100 million yuan,

•100 software and information service enter-prises that will bring in a total of 100 billion yuan in sales revenue for the IT service indus-try, and

•1,000 high-end skilled workers for the long-term development of cloud computing.5

Aliyun, a subsidiary of Alibaba Ltd., has been chosen (along with Microsoft) to develop cloud computing technology for SMEs in the Hang-zhou Yun Chao Shi (“Cloud Supermarket”) project.

Similarly, IBM has partnered with Wuxi Tai Lake Industry Investment and Development Co. to support the municipal government in estab-lishing a cloud computing center in the Wuxi Yun Gu (“Cloud Valley”) project.

Finally, Tencent started a 2 billion yuan cloud computing project in the Shenshan (Shenzhen-Shanwei) Cooperation Zone.6 Other companies, including Huawei, ZTE Communication, and

Icmama, have also invested heavily in establish-ing a cloud computing infrastructure in this zone—a project called the Shenzhen Kun Yun (“Cloud of Flying Fish”) program.

Other cities, including Chongqing, Guangzhou, and Xian, have joined the bandwagon. In April 2011, Chongqing announced two ambitious proj-ects along Two Rivers, also known as Liangxiang. One project, “International Cloud Computing Center in Liangxiang,” has a total investment of 40 billion yuan for five years from industry. The other project, “Jiangjin District Cloud Computing Industrial Base,” which uses China’s core tech-nologies for cloud storage and search, has a total investment of 50 billion yuan.7 Figure 1 shows the locations of China’s cities with heavy investments and megaprojects in cloud computing.

Government SupportHowever, success in China’s market depends on more than just industry and provincial interest—national government support is also required. The China government’s 2011–2015 five-year de-velopment plan specifies cloud computing as one of its main strategic investment areas, including the technologies and infrastructure required to support it.2 Cloud computing research and devel-opment centers have been established in several locations around China.

Furthermore, the government’s use of cloud computing has been growing as well, with pro-vincial and city governments (such as in Beijing and Shanghai) investing in data centers intended to support its use. The Beijing government aims to provide public cloud services to its 20 mil-lion residents in 2013, while projects in other core centers primarily target China’s 47 million SMEs, which have limited IT resources and ex-pertise, and its 1 billion mobile phone/platform users.

This government support is essential for driv-ing industry growth and developing regulations for its effective use.

Mobile Cloud TerminalsAnother essential component is the reconfigura-tion of the devices that send information to, and receive data from, the cloud. Currently, phones and pads are the major devices in China propa-gating the adoption of the Internet.8 To ensure that future phones and pads could serve as

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Feature: Cloud Computing

interfaces between humans and clouds requires investing in the development of the phone as a terminal (paaT) and the pad as a terminal (PaaT).

Because mobile devices are traditionally con-strained by limited resources—such as low CPU power, small memory, and a battery-powered environment—researchers worldwide are investing in and working to establish an elastic application model that lets cloud resources (unlimited com-puting power and data storage) argument the ca-pability of mobile devices.9 In particular, in China, Xinwen Zhang and his colleagues suggest parti-tioning an application into multiple components, called weblets, so the device’s elasticity manager can determine how the weblets should be com-puted in a mobile device or cloud.10 Clouds will have to be equipped with such elasticity manag-ers to deal with these demands.

Table 1 compares the current smartphones phone system with a futuristic paaT/PaaT equipped with elasticity managers.

Cloud Computing BarriersDespite all of these investments and govern-ment support, China must address three main concerns to successfully facilitate cloud develop-ment and sustain its growth: Internet filtering and blocking through China’s so-called Great Firewall, the problem of security and privacy regulation and implementation, and operational infrastructure (especially power availability and consistency).

The Great FirewallAlthough China represents a significant portion of the world’s Internet users, with over 513 mil-lion at the last count, most remain isolated behind the country’s system of Internet access controls (known informally as the Great Firewall).11 This access control system passively blocks Internet browsers from sites deemed inappropriate (in the past, these sites included search and social networking sites, such as Google and Facebook).

Figure 1. Major cloud computing projects and programs in China. The bold faced clouds are the pilot projects, and others are cities hoping to join the cloud computing band wagon.

Beijing “Cloudsof Blessing”

Shanghai“Sea of Clouds”

Wuxi“Cloud Valley”

Hangzhou“Cloud Supermarket”

Shenzhen “Cloud ofFlying Fish”

Guangzhou’sCloud

Chongqing ’sCloud

Xian’s Cloud

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Furthermore, the Great Firewall actively closes off access to sites deemed problematic for the government, such as microblogging sites that advocate against government policies.7

According to Sky Canaves, there are ways to avoid this overarching censorship.7 Unfortunately, these methodologies are highly technical and so not available to most Internet users in China, thus effectively leaving most browsers behind the Great Firewall. Although sites that provide cloud services to customers have sprung up, the lack of access to Dropbox.com, Box.com, Google Docs, or similar cloud-based services means that addi-tional applications and servers must be developed for effective use in China.

Similarly, nonlocal users might be isolated from services within the country. Thus, the Great Firewall poses a significant potential threat to the viability of cloud services that rely on ef-fective economies of scale.2

Privacy ConcernsA related issue is the problem of user security and privacy. Canaves notes that the enforcement of policies is often inconsistent, because even offi-cial censors don’t fully understand China’s vague and perplexing rules.11 In part, this vagueness stems from the fact that, until recently, privacy wasn’t a right per se in China’s law; instead, pri-vacy was protected under the right of reputation.12 Although regulations have been amended to cope with the changing privacy landscape, this contested area remains filled with temporary regulations.

Furthermore, significant concerns arise re-garding the use of cloud computing in China, given the known predilection of the government for spying on its citizens, because data within the cloud is perceived to be more vulnerable to such surveillance than data stored locally.12

Insufficient InfrastructureFinally, there are significant concerns regarding the reliability of China’s power infrastructure. These concerns largely preclude the building of large-scale data centers of the type required for cloud computing on an industrial scale.12 Fur-thermore, challenges remain in the implemen-tation of telecommunications regulations and infrastructure. These problems must be resolved before the telecommunications infrastructure can be expanded.

China needs to refine the regulations to meet the required needs of the market, institute an ef-fective and impartial regulation regime, control costs at the market rate, and improve competi-tion.12 Without these changes, cloud computing is unlikely to be successful.

Future Cloud DemandsPress releases from governments around the world show that investment into clouds is likely to surge dramatically in the coming three to five years.4–6,14,15 China is probably the biggest inves-tor in the world.16 By visualizing the development of clouds a few years down the road in China (see Figure 2), we see opportunities for developing

Table 1. Comparison of current smartphones and futuristic phone as a terminal (paaT) and the pad as a terminal (PaaT).

Current smartphones Futuristic paaT/PaaT

Form Combination of pda, phone, and computer any wearable form for mobility

Hardware

Several tens of gbytes of storage Virtual storage on demand

Wi-Fi, gpS ubiquitous networking facilities

Camera, microphone, touch sensors Hardware combo

2d/3d projection

Software:

Business

depends on the application

apps can be cascaded for better information management

new protocol across oS/hardware

users become “programmers of life”

Entertainment games with motion sensors multimodal (multisensory) sensors

avatar-driven games

Social life and private life

Connect to simple notification service (SnS) geospatial SnS

digital diary Virtual personal assistant

identity blurring (self-customized), which lets users protect their identity and privacy

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new business models and demand as well as threats to privacy and accessibility for cloud-related technology companies, investors, and governments.

Similar to the Internet tech-bubble burst a de-cade ago, a cloud bubble is unavoidable. After go-ing through a period of overheated investments, with companies spending more money on cloud technology than is needed, dominant players will emerge and a period of a consolidation with con-siderable merger and acquisition activities will take place. In the long run, only governments and entrepreneurs who impose constraints and come up with workable business models will reap the benefits of mobile and malleable clouds.

G iven strong government support and investments from private enterprises, market acceptance of cloud computing

services is likely to follow. China is the world’s largest Internet, computer, and mobile phone market, growing rapidly and at a sustained rate.8 With a population of 1.3 billion, the potential profits of cloud services in China are enormous, as are the potential returns in efficiency and eco-nomic growth.

With a concerted effort to overcome problems such as security and privacy, along with govern-ment support for an increasingly open China’s Internet, this endeavor will provide substantial opportunities for service providers and compa-nies that rely on the expansion of available space for communications and other applications.17

AcknowledgmentThis research was supported by a grant (RP/ESCE-01/2010) from the Macao Polytechnic Institute.

References 1. T. Leighton, “Akamai and Cloud Com-

puting: A Perspective from the Edge of the Cloud,” white paper, Akamai Technologies, 2009; www.akamai.com/cloud.

2. S . Ba k ht i a r i , “C loud C omput i ng in China—The Greatest Hurdle?” Business Cloud News, 17 Oct. 2011; w w w. b u s i n e s s c l o u d n e w s . c o m /pl at for m-a s -a- se r v ice /604 -c a n- cloud-computing-prosper-in-china. html.

3. Y. Gao, “A Big Cloud on the Horizon Proves to Be Good News in Computer Industry,” China Daily, 16 Jan. 2012; www.chinadaily.com.cn/cndy/2012-01/16/content_14450004.htm.

4. “Five Cities Chosen for Cloud Computing Pilot Plan,” China Daily, 8 Nov. 2011; www.chinadaily.com.cn/cndy/2011-11/18/content_14115178.htm.

5. “Shanghai Releases 3-Year Cloud Computing Plan,” People’s Daily, 18 Aug. 2011; http://english.peopledaily.com.cn/90001/90778/90860/7108660.html.

6. “Tencent Starts Cloud Computing Project,” Shen-zhen Government Online, 19 Dec. 2011; http:// english.sz.gov.cn/ln/201112/t20111219_1788830.htm.

7. “Chongqing to Invest an Additional 50 Billion Yuan in Cloud Computing,” People’s Daily, 22 April. 2011; http://english.peopledaily.com.cn/90001/98649/ 7359164.html.

8. L.S.L. Lai and W.M. To, “The Emergence of China in the Internet Market,” IT Professional, vol. 14, no. 1, 2012; doi:10.1109/MITP.2012.16.

9. B. Nield, “Smartphone Power Struggles: Will We Ever Have Battery-Free Mobiles?” CNN, 28 Feb. 2013; http://edition.cnn.com/2013/02/27/tech/battery-free-mobile-phones.

10. X. Zhang, et al., “Towards an Elastic Application Model for Augmenting the Computing Capabilities of Mobile Devices with Cloud Computing,” Mobile Networks and Applications, vol. 16, no. 3, 2011; DOI:10.1007/s11036-011-0305-7.

11. S. Canaves, “China’s Social Networking Problem,” IEEE Spectrum, vol. 48, no. 6, 2011; doi:10.1109/MSPEC.2011.5779799.

12. Y. Wu et al., “A Comparative Study of Online Pri-vacy Regulations in the US and China,” Telecom-munications Policy, vol. 35, no. 7, 2011; doi:10.1016/ j.telpol.2011.05.002.

13. N. He, “Current and Future Regulation Challenges for the Chinese Telecommunications Sector,” Int’l J.

Figure 2. Visualizing the demand for clouds and mobile clouds (real versus inflated demands), using a typical boom and bust business cycle (or Gartner hype cycle).

Real

dem

and

In�a

ted

dem

and

(and

inve

stm

ent)

2010 Present 3–5 years from now 6–10 years from now

In�ated demand/investmentBoom and bust

Demand Projected demand

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Marketing Studies, vol. 2, no. 2, 2010; www.ccsenet.org/journal/index.php/ijms/article/view/8143/6170.

14. V. Kundra, “State of Public Sector Cloud Comput-ing,” US Chief Information Officers Council, 2010; www.cio.gov/pages.cfm/page/State-of-Public-Sector-Cloud-Computing.

15. K. Jeffery and B. Neidecker-Lutz, “The Future of Cloud Computing—Opportunities for European Cloud Computing Beyond 2010,” European Com-mission, 2010; http://cordis.europa.eu/fp7/ict/ssai/docs/cloud-report-final.pdf.

16. “China Cloud Programme Will More Than Double Datacenter Capacity with Investment of USD 370 Billion,” Yahoo!Finance, 28 Feb. 2013; http://uk.finance.yahoo.com/news/china-cloud-programme-more-double-110200676.html.

17. S. Murugesan, “Cloud Computing Gives Emerging Markets a Lift,” IT Professional, vol. 13, no. 6, 2011; doi:10.1109/MITP.2011.94.

Wai-Ming To is a professor in the School of Business at the Macao Polytechnic Institute, China. His research

interests include environmental management and total quality management. To received his PhD in structural dynamics from Imperial College London. Contact him at wmto@ipm.edu.mo.

Linda S.L. Lai is an associate professor in the School of Business at the Macao Polytechnic Institute, China. Her research interests include knowledge management and elec-tronic commerce. Lai received her PhD in information man-agement from Lancaster University. Contact her at sllai@ipm.edu.mo.

Andy W.L. Chung is the founder of XNT Limited, China—a company specializing in creative digital appli-cations, games for phones, and cloud applications. Chung received his MS in environmental engineering and man-agement from the Hong Kong University of Science & Technology. Contact him at info@xnt.hk.

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