The Tokyo metropolitan area is experiencing a surge in its data center market, positioning it as a global leader in the industry. This growth has been attributed to a variety of factors, including mounting security concerns in China, a trend that follows a breakdown in the business environment that has led to a preference for Tokyo over Beijing. American companies have singled out the escalating friction between the United States and China as a significant reason for the shift, with industry insiders pointing to an increasingly unfriendly and uncertain business climate in China.
Inzai City in the Tokyo metropolitan area has become a popular location for data centers, with companies such as Google, Amazon, and NTT establishing a strong presence in the city. This trend is seen across the broader Tokyo area, with the Tama region also becoming a hotspot for data centers. The proliferation of data centers in Japan is driven by a variety of factors, including the growing digital transformation of businesses, which has increased the demand for data centers that house servers in the country.
The data industry is experiencing a significant shift from China to Japan due to the increase in China’s security measures and data laws. Beijing has experienced difficulties in keeping up with the growth of its data facility capacity in recent years, while Tokyo is expected to see its capacity double. A major concern for foreign companies is China’s Anti-Espionage Law and Data Security Law, which includes activities carried out abroad in its scope of legal control and imposes stricter supervision on activities that may affect China’s security. This has led to a cooling down of China’s data industry as foreign companies are concerned about the undefined scope of the laws and the potential for conviction at any time.
This shift also presents opportunities for Japan to help transform China by competing aggressively in the data industry and aiding in the freedom of Chinese netizens from the CCP. If China’s political transformation is successful, Japan’s economy would benefit significantly, but on the other hand, Japan would bear a significant cost if China remains unchanged. This growth in data centers in Tokyo and the shift away from China could ultimately facilitate China’s transformation and create a safer and more prosperous future for the region as a whole.