Spending on cloud infrastructure services in China increased by $2.1 billion, or 55 percent, to $6 billion in the first quarter of 2021 compared to the same period last year, according to market research firm Canalys.
That spending increased by more than $200 million compared with the previous quarter, a much slower growth rate, according to Canalys' report.
The slower year-on-year growth suggests a degree of disruption to the business of cloud service providers in China, the report said.
But cloud infrastructure services growth in China continues to outpace the rest of the world as the Chinese government makes cloud computing a top strategic priority, the report said.
Overall, China is the second-largest market after the US, accounting for 14 percent of global input, up from 12 percent in the first quarter of 2020.
The top four cloud service providers in China are Alibaba Cloud, Huawei Cloud, Tencent Cloud, and Baidu Cloud, which together account for more than 80 percent of total spending, with Alibaba Cloud leading the way with a 40 percent share.
Matthew Ball, chief analyst at Canalys, said 2021 will be a year of growth for cloud services in the Chinese market, which will expand usage scenarios and enhance the value proposition of cloud services.
Cloud service providers in China are also expanding their reach into foreign markets and exporting their cloud services globally to accelerate digital transformation in other parts of Asia Pacific and the European Middle East and Africa (EMEA) region, Ball said.
But these service providers have to deal with the ongoing challenges posed by local data sovereignty laws and highly customized industry-specific needs, Ball said.