Shanghai FTZ Lingang Launches International Data Hub, Sources Reveal

August 19 — The Lingang Special Area, a vital testing ground for economic and trade policies within the Shanghai Free Trade Zone, has initiated the development of an International Data Processing Center, utilizing supportive policies and innovative institutional measures, according to multiple industry sources.

Significant infrastructure has been established in Lingang to support a global data hub, including primary nodes, edge nodes, and dedicated business zones. These developments mark the commencement of the data processing facility’s construction, as reported on August 15.

Secure, compliant cross-border data transmission lines are already operational to facilitate safe and lawful data exchanges. Lingang also offers solutions for local data processing companies to explore innovative international data business models through physical isolation and electronic fencing mechanisms.

This approach is similar to China’s traditional “processing with supplied materials” model in international trade, where companies in Lingang take in raw data from abroad, process it locally, and transform it into market-ready data products.

Meeting data compliance standards and maintaining cost-effective technical operations are key for cross-border data processing, stated Wang Liang, an official from the Lingang New Area Administrative Committee’s data division.

“Data flow must adhere to legal regulations,” said Li Ke, the data director at a local digital technology firm. “Companies managing overseas data need dedicated lines to facilitate cross-border transmittal without the data entering mainland China.”

Lingang’s policy reforms and institutional breakthroughs created a conducive environment for this business model, prompting companies like Linke Zhihua Digital Technology to establish a presence there. Founded just last May, the company has grown rapidly to 300 employees as its operations expand smoothly, according to Li.

The company stores client data on local servers; its data engineers process and label this data via dedicated lines, ensuring that the data never leaves the firm’s internal storage systems, Li explained.

“About half of our clients are domestic, and the other half are international, primarily large AI developers and autonomous vehicle companies,” Li added.

So far, Lingang’s dedicated global internet data channels have supported 38 data storage services across 25 companies. Wang highlighted that the area has invested heavily in infrastructure such as dedicated lines with low latency, high bandwidth, and minimal packet loss.

Aside from providing a reliable and regulation-compliant environment for data companies, Lingang has implemented various measures to help reduce their operational costs during early-stage business development, Wang noted.

Initiatives include group purchasing programs for cross-border data lines, which cut the application process by approximately a month and reduce costs by 80%. The area also offers scalable, high-quality, low-cost computing services, along with subsidies of up to 10 million CNY (around USD 1.4 million), free office and apartment spaces for key talent and startups, and comprehensive support services for digital firms seeking international expansion.

Lingang’s efforts go beyond creating a stable operational environment; they aim to alleviate the early financial pressures faced by data firms.

During the initial phase of cross-border data projects, when data volumes are small, the cost of dedicated lines poses a significant challenge. Liu Xinyu, CEO of a local tech company, noted that Lingang’s collective purchasing approach helps businesses save money and ease startup burdens.

“Hong Kong and Singapore have high labor and computing costs, which limits their capacity to handle large-scale digital processing for Western markets,” said Wang. “Meanwhile, Southeast Asian countries like Malaysia have lower costs but lack robust digital infrastructure and skilled workforces, making it difficult to handle high-end global data projects.”

The concentration of academic institutions in Lingang provides a rich talent pool, Liu added. “We require personnel proficient in less common languages such as Thai, Indonesian, and Vietnamese, and local universities are key to meeting this demand.”