| REPORT ATTRIBUTE |
DETAILS |
| Historical Period |
2020-2023 |
| Base Year |
2024 |
| Forecast Period |
2025-2032 |
| China Data Center Liquid Cooling Market Size 2024 |
USD 497.62 Million |
| China Data Center Liquid Cooling Market, CAGR |
26.92% |
| China Data Center Liquid Cooling Market Size 2032 |
USD 3349.75 Million |
Market Overview:
The China Data Center Liquid Cooling Market is projected to grow from USD 497.62 million in 2024 to an estimated USD 3349.75 million by 2032, with a compound annual growth rate (CAGR) of 26.92% from 2024 to 2032.
Several key drivers are propelling the growth of the data center liquid cooling market in China. Firstly, the increasing power density of IT equipment necessitates more efficient cooling methods, as traditional air-based systems struggle to manage the heat generated by modern high-performance servers. Liquid cooling solutions, such as immersion cooling and direct-to-chip cooling, offer superior thermal management, enabling data centers to maintain optimal operating temperatures while reducing energy consumption. Secondly, the Chinese government’s emphasis on green technologies and energy efficiency aligns with the adoption of liquid cooling systems, which are known for their reduced environmental impact compared to conventional cooling methods. Initiatives promoting sustainable practices in data center operations further bolster the market’s expansion. Additionally, the proliferation of data-intensive applications, including AI, big data analytics, and the Internet of Things (IoT), drives the need for robust and efficient cooling infrastructures to ensure the reliability and performance of data centers.
Regionally, major Chinese cities such as Beijing, Shanghai, and Guangdong are at the forefront of data center development, leading to a heightened demand for advanced cooling solutions. These urban centers host a significant number of hyperscale and colocation data centers, which are increasingly adopting liquid cooling technologies to enhance energy efficiency and support high-density computing environments. The favorable regulatory environment and substantial investments in digital infrastructure in these regions further accelerate the adoption of liquid cooling systems. As data centers continue to proliferate across China, the liquid cooling market is expected to witness robust growth, driven by the need for sustainable and efficient cooling solutions to support the country’s expanding digital ecosystem.
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Market Insights:
- The China Data Center Liquid Cooling Market is projected to grow from USD 497.62 million in 2024 to USD 3349.75 million by 2032, with a CAGR of 26.92% driven by increasing demand for energy-efficient cooling.
- The rise of high-performance computing (HPC), AI, and IoT applications is pushing data centers toward liquid cooling technologies to manage high thermal loads effectively.
- Government policies promoting green energy, carbon neutrality, and energy efficiency are accelerating the adoption of liquid cooling systems in data centers.
- The expansion of hyperscale and edge data centers is fueling demand for efficient and scalable cooling solutions, supporting China’s growing digital economy.
- High initial investment costs and infrastructure complexity pose challenges for widespread adoption, particularly for small and medium-sized data center operators.
- Regulatory uncertainties and compliance issues surrounding cooling fluids and environmental policies impact the decision-making process for data center operators.
- Major urban centers such as Beijing, Shanghai, and Guangdong are leading the adoption of liquid cooling due to their concentration of hyperscale and colocation data centers.
Market Drivers:
Escalating Demand for High-Performance Computing and AI Applications
China’s rapid digital transformation has led to a substantial increase in data-intensive applications, including high-performance computing (HPC) and artificial intelligence (AI). These applications require robust computing power, resulting in higher heat generation within data centers. Traditional air-based cooling systems often struggle to manage these elevated thermal loads efficiently. Liquid cooling solutions, such as direct-to-chip and immersion cooling, offer superior thermal management capabilities, making them essential for maintaining optimal performance and reliability in modern data centers.
Government Initiatives Promoting Energy Efficiency
The Chinese government has implemented policies emphasizing energy efficiency and environmental sustainability. Initiatives like the “Eastern Data, Western Computing” plan aim to relocate data centers to regions with cooler climates and abundant renewable energy sources, reducing reliance on traditional power grids. This strategic shift encourages the adoption of advanced cooling technologies, including liquid cooling, to enhance energy efficiency and align with national sustainability goals.
Advancements in Liquid Cooling Technologies
Continuous technological advancements have made liquid cooling systems more efficient and cost-effective. Innovations in cooling mediums, such as dielectric fluids, and the development of modular liquid cooling solutions have simplified integration into existing data center infrastructures. For example, immersion cooling can reduce energy usage by up to 50% compared to traditional air-cooling methods. These advancements not only improve thermal management but also reduce operational costs, making liquid cooling an attractive option for data center operators seeking to enhance performance while minimizing expenses.
Expansion of Hyperscale and Edge Data Centers
The proliferation of hyperscale and edge data centers in China necessitates efficient cooling solutions capable of handling high-density computing environments. Liquid cooling systems are well-suited to meet these demands, offering effective thermal management and energy efficiency. As data centers expand to support the growing digital economy, the adoption of liquid cooling technologies is expected to rise, driven by the need to maintain operational efficiency and sustainability. For instance, two-phase liquid cooling systems are gaining traction due to their ability to handle higher power densities and heat fluxes, making them ideal for AI workloads
Market Trends:
Adoption of Immersion Cooling Technologies
In China, data centers are increasingly adopting immersion cooling technologies to enhance energy efficiency and manage higher heat loads. This trend is driven by the need for more effective cooling solutions as data centers become more densely packed with high-performance computing equipment. For instance, Alibaba’s immersion liquid-cooled data centers have shown significant energy savings, reducing energy consumption by more than 35% compared to traditional air-cooled systems. Immersion cooling submerges IT components in thermally conductive dielectric liquids, which dissipate heat more efficiently than traditional air-based cooling. The adoption of this technology is also gaining momentum due to its ability to reduce operational costs by lowering energy consumption and minimizing the need for complex air-conditioning systems. As China continues its push toward digital infrastructure expansion, immersion cooling is becoming a key component in sustainable data center operations.
Integration of AI in Cooling Systems
Artificial intelligence (AI) is being integrated into data center cooling systems to optimize performance and reduce energy consumption. AI algorithms can predict temperature fluctuations and adjust cooling mechanisms in real time, leading to more efficient operations. For example, AI-driven predictive maintenance is becoming essential in data centers, enabling proactive measures against unexpected downtime and costly repairs by analyzing historical data and adjusting cooling parameters dynamically. Machine learning models analyze historical data, adjust cooling parameters dynamically, and identify inefficiencies, allowing operators to reduce energy waste. This AI-driven approach helps extend the lifespan of critical IT hardware by preventing overheating and maintaining stable operating conditions. The integration of AI into cooling systems aligns with China’s broader technological advancements and its emphasis on smart infrastructure development.
Shift Towards Edge Computing
The rise of edge computing in China necessitates localized data processing, leading to the development of smaller, decentralized data centers. These facilities require efficient and compact cooling solutions, making liquid cooling an attractive option. As businesses and consumers demand real-time processing for applications such as autonomous vehicles, 5G networks, and smart cities, edge data centers must ensure optimal thermal management. Liquid cooling helps improve operational efficiency in these facilities by reducing latency and maintaining stable conditions in high-density computing environments. This shift is expected to accelerate further as China’s digital economy expands, increasing the need for localized, high-performance computing capabilities.
Government Initiatives Promoting Green Technologies
The Chinese government’s initiatives to promote green technologies and energy efficiency are encouraging data centers to adopt liquid cooling systems. These systems offer superior thermal management compared to traditional air-cooling methods, aligning with national sustainability goals. Policies supporting carbon neutrality and the development of energy-efficient data centers are driving investments in next-generation cooling technologies. Regulatory frameworks also incentivize data center operators to explore renewable energy sources in combination with liquid cooling to further reduce their carbon footprint. As China continues to lead global efforts in sustainable technology, the integration of liquid cooling in data centers will play a pivotal role in meeting environmental targets.
Market Challenges Analysis:
High Initial Investment and Infrastructure Complexity
The adoption of liquid cooling solutions in China’s data centers requires substantial initial investment in specialized infrastructure, which poses a major challenge for widespread implementation. Unlike traditional air-based cooling systems, liquid cooling demands custom-built cooling loops, specialized fluid-handling components, and advanced containment measures to prevent leaks. Many data center operators, particularly small and medium-sized enterprises, hesitate to allocate significant capital expenditures toward transitioning from air cooling to liquid cooling. The complexity of retrofitting existing data centers with liquid cooling further limits adoption, as it often necessitates significant modifications to the current layout and hardware configurations.
Limited Technical Expertise and Maintenance Challenges
Despite its efficiency benefits, liquid cooling technology requires a highly skilled workforce to manage installation, maintenance, and troubleshooting. Data center operators in China face a shortage of trained professionals with expertise in handling liquid cooling systems, which can lead to operational inefficiencies and increased maintenance costs. Unlike air cooling, which is relatively straightforward to maintain, liquid cooling systems involve risks such as coolant leaks, fluid degradation, and component corrosion. These challenges necessitate continuous monitoring and specialized maintenance protocols, making it more resource-intensive for operators to sustain efficient operations.
Regulatory Uncertainty and Compliance Issues
China’s regulatory landscape for data centers is evolving, with new policies focusing on energy efficiency, carbon neutrality, and environmental sustainability. However, the lack of standardized guidelines and compliance frameworks for liquid cooling technology creates uncertainty for data center operators. Regulatory ambiguity surrounding the use of specific cooling fluids, waste heat recovery, and environmental impact assessments adds to the complexity of liquid cooling adoption. For instance, the Chinese government has launched initiatives to regulate energy consumption in data centers, but there is an urgent need for industry-standard organizations to manage the standardization of liquid cooling. Companies must navigate these challenges while ensuring their operations align with government sustainability initiatives, which can slow down investment decisions and market growth.
Scalability Concerns for Large Data Centers
While liquid cooling provides superior thermal management, scalability remains a challenge for large-scale data center operations in China. Hyperscale data centers, which house thousands of servers, require cooling solutions that are not only efficient but also easy to deploy across vast infrastructures. Implementing liquid cooling at such a scale demands significant structural modifications and integration with existing IT equipment, increasing deployment time and costs. Until the technology becomes more standardized and cost-effective, many large data center operators may continue relying on hybrid cooling solutions instead of fully transitioning to liquid cooling.
Market Opportunities:
China’s rapid digital transformation and increasing adoption of high-performance computing (HPC), artificial intelligence (AI), and cloud-based services present a significant opportunity for the data center liquid cooling market. As data centers continue to scale operations to accommodate workloads with higher power densities, liquid cooling is emerging as a critical solution to ensure energy efficiency and operational reliability. The transition toward sustainable data center practices, driven by China’s commitment to carbon neutrality by 2060, further accelerates the demand for liquid cooling technologies. With government initiatives encouraging energy-efficient infrastructure and corporate sustainability goals pushing for reduced carbon footprints, liquid cooling providers have an opportunity to establish themselves as essential players in the country’s evolving data center ecosystem.
The rise of edge computing in China is driving demand for compact, high-efficiency cooling solutions in decentralized data centers. As businesses deploy edge data centers to support real-time processing for applications such as 5G networks, autonomous vehicles, and smart cities, the need for liquid cooling solutions capable of maintaining optimal thermal conditions in space-constrained environments is growing. Additionally, continuous technological advancements, including the development of dielectric coolants and modular liquid cooling systems, are making these solutions more cost-effective and scalable. With increasing investments in digital infrastructure and advancements in cooling technology, liquid cooling providers have the opportunity to expand their presence and cater to the evolving needs of China’s fast-growing data center industry.
Market Segmentation Analysis:
The China data center liquid cooling market is segmented based on type, application, component, and industry vertical. Each segment plays a crucial role in shaping the adoption of liquid cooling solutions across the country’s expanding data center infrastructure.
By Type, the market is divided into direct liquid cooling and indirect liquid cooling. Direct liquid cooling, which involves direct contact between cooling fluid and IT components, is gaining traction due to its superior heat dissipation capabilities. Indirect liquid cooling, which uses a secondary loop to transfer heat, remains a preferred choice for data centers transitioning from traditional cooling systems.
By Application, the demand for IT equipment cooling dominates, as high-performance computing and AI-driven workloads require efficient cooling solutions. Power supply cooling and UPS cooling are also critical to ensuring stable and uninterrupted operations, particularly in hyperscale and enterprise data centers.
By Component, key elements include chillers, cooling distribution units, heat exchangers, and pumps. Chillers account for a significant share due to their ability to maintain stable operating temperatures. Advanced heat exchangers and cooling distribution units are also essential for optimizing cooling efficiency.
By Industry Vertical, the IT and telecom sector leads in liquid cooling adoption due to the growing need for high-density computing. The BFSI, government, and healthcare sectors are also embracing liquid cooling for data security, compliance, and operational efficiency. As digital transformation accelerates, demand across all verticals is expected to rise, driving further growth in the liquid cooling market.
Segmentation:
By Type Segment:
- Direct Liquid Cooling
- Indirect Liquid Cooling
By Application Segment:
- IT Equipment Cooling
- Power Supply Cooling
- UPS Cooling
- Others
By Component Segment:
- Chillers
- Cooling Distribution Units
- Heat Exchangers
- Pumps
- Others
By Industry Vertical Segment:
- BFSI
- IT and Telecom
- Government
- Healthcare
- Others
Regional Analysis:
China’s data center liquid cooling market is experiencing significant growth, driven by the country’s rapid digital transformation and increasing demand for energy-efficient data center solutions. As of 2023, the Asia-Pacific (APAC) region holds the largest share of the global data center liquid cooling market, with China being a major contributor to this dominance.
Northern China: Beijing and Tianjin
In Northern China, cities like Beijing and Tianjin have emerged as prominent hubs for data center development. Beijing, as the capital city, hosts numerous government agencies, financial institutions, and tech companies, leading to a high concentration of data centers. The region’s cold climate offers natural advantages for data center cooling, reducing reliance on mechanical cooling systems. This climatic benefit, combined with the increasing adoption of liquid cooling technologies, enhances energy efficiency and aligns with China’s sustainability goals.
Eastern China: Shanghai and Jiangsu Province
Eastern China, particularly Shanghai and Jiangsu Province, represents a significant portion of the data center liquid cooling market. Shanghai’s status as a global financial center and its robust digital infrastructure have attracted substantial investments in data center facilities. The region’s humid subtropical climate necessitates advanced cooling solutions, making liquid cooling technologies essential for maintaining optimal data center operations. The presence of numerous multinational corporations and a thriving tech industry further drives the demand for efficient and sustainable data center cooling solutions.
Southern China: Guangdong Province
Guangdong Province, with cities like Guangzhou and Shenzhen, is a critical area for data center growth in Southern China. As a manufacturing and technology hub, the region requires robust data infrastructure to support its industries. The hot and humid climate poses challenges for data center cooling, making liquid cooling solutions particularly beneficial. The adoption of these technologies not only improves energy efficiency but also supports the province’s initiatives toward green and sustainable development.
Western China: Chengdu and Chongqing
Western China, encompassing cities like Chengdu and Chongqing, is witnessing increased data center investments due to government initiatives promoting the development of digital infrastructure in inland regions. The cooler climate in these areas offers natural advantages for data center cooling, reducing energy consumption. The implementation of liquid cooling technologies in these regions aligns with national strategies to balance economic development and environmental sustainability.
Key Player Analysis:
- Huawei Technologies
- Vertiv
- Schneider Electric
- LiquidCool Solutions
- CoolIT Systems
- Rittal
- Asetek
- Stulz
- Fujitsu
- Inspur Systems
Competitive Analysis:
The China data center liquid cooling market is highly competitive, with both global and domestic players striving to expand their market presence. Established international companies leverage their expertise in advanced cooling technologies and partnerships with hyperscale data centers to strengthen their foothold. Domestic firms, on the other hand, benefit from government support, local manufacturing capabilities, and a deep understanding of regulatory requirements, enabling them to compete effectively. Key players focus on product innovation, strategic collaborations, and mergers and acquisitions to enhance their market share. The increasing demand for AI-driven and high-density computing environments has prompted companies to develop more efficient direct-to-chip and immersion cooling solutions. Additionally, regulatory policies promoting energy efficiency and carbon neutrality create opportunities for companies offering sustainable cooling technologies. As competition intensifies, market participants are investing in R&D, cost optimization, and regional expansion to gain a competitive edge in China’s evolving data center landscape.
Recent Developments:
- In August 2023, Huawei and JD.com jointly launched a new generation of indirect evaporating cooling solutions in China. This collaboration leverages Huawei’s Digital Energy and JD Cloud capabilities to enhance data center cooling efficiency. The new solution features reduced capital expenditures, improved heat exchange efficiency, and enhanced safety with lithium battery energy storage.
- In February 2025, Global Switch partnered with HKBN Enterprise Solutions to provide advanced liquid-cooled data center services in Hong Kong. This collaboration offers access to Global Switch’s resilient infrastructure and cutting-edge liquid cooling solutions, supporting the growing demand for high-performance computing and AI applications in the region.
Market Concentration & Characteristics:
The China data center liquid cooling market exhibits a moderate to high market concentration, with a mix of established global players and emerging domestic companies competing for market share. Leading technology firms and specialized cooling solution providers dominate the market, leveraging advanced innovations and strategic partnerships to enhance their presence. The increasing demand for energy-efficient and high-performance cooling solutions has driven market players to focus on research and development, expanding their product portfolios to cater to hyperscale, colocation, and enterprise data centers. The market is characterized by technological advancements, regulatory-driven sustainability goals, and the rising adoption of AI and cloud computing. As China prioritizes carbon neutrality and data security, liquid cooling solutions are becoming an essential component of modern data center infrastructure. The shift toward direct liquid cooling and immersion cooling technologies reflects the industry’s commitment to enhancing operational efficiency while reducing environmental impact.
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Report Coverage:
The research report offers an in-depth analysis based on Type Segment, By Application Segment, By Component Segment and By Industry Vertical Segment. It details leading market players, providing an overview of their business, product offerings, investments, revenue streams, and key applications. Additionally, the report includes insights into the competitive environment, SWOT analysis, current market trends, as well as the primary drivers and constraints. Furthermore, it discusses various factors that have driven market expansion in recent years. The report also explores market dynamics, regulatory scenarios, and technological advancements that are shaping the industry. It assesses the impact of external factors and global economic changes on market growth. Lastly, it provides strategic recommendations for new entrants and established companies to navigate the complexities of the market.
Future Outlook:
- Rising demand for high-performance computing (HPC) and artificial intelligence (AI) will drive the adoption of liquid cooling solutions.
- Expansion of hyperscale data centers will accelerate the deployment of liquid cooling for efficient thermal management.
- Stricter energy efficiency regulations and carbon neutrality goals will push data centers toward sustainable cooling technologies.
- Innovations in dielectric fluids, cooling loop designs, and immersion cooling will enhance efficiency and lower operational costs.
- Growth in edge computing will create demand for compact and efficient liquid cooling solutions in decentralized data centers.
- Increased investments in research and development will improve liquid cooling technologies and ensure regulatory compliance.
- Competition among domestic and international players will lead to improved product offerings and cost-effective solutions.
- Integration of liquid cooling with renewable energy sources will improve sustainability and reduce carbon footprints.
- AI-driven automation in cooling management will optimize energy consumption and enhance thermal efficiency.
- Retrofitting of existing data centers with hybrid or full liquid cooling systems will increase to improve performance and cost savings.
