Microsoft has continued its public cloud expansion in China with a new Azure data centre region. China North 3 is set to go live during 2022.

The tech giant said the new resources, to be located in Hebei province, would “effectively double the capacity” of its intelligent cloud portfolio in China. The extra cloud power is needed to meet growing demand in the region, the Redmond-headquartered firm added.

Chinese internet and data centre service provider 21Vianet will operate China North 3, as it has done with Microsoft’s previous China deployments. This is due to Chinese regulatory requirements designed to aid Made in China 2025, a national strategy to increase independence from foreign suppliers.

In practice, this means cloud instances must be kept physically separate from Microsoft’s global cloud. However, it uses the same technical architecture that’s used in Azure cloud around the world, which according to Microsoft makes it “easy” and “efficient” for multinationals to move data and applications in and out of China.

For enterprises, having public cloud infrastructure located in the region it operates means reduced latency and the ability to adhere to local laws and regulations.

However, this includes China’s National Intelligence Law, which means any data stored on Microsoft’s Chinese Azure servers can be accessed by the Chinese state.

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Microsoft has been working with 21Vianet since 2014 when it launched two initial regions in China, becoming the first public cloud service available in the country.

In the years since Microsoft has launched other cloud services in China including Office 365, Dynamics 365 and Power Platform – all operated by 21Vianet.

The new region in the Hebei province follows data centres in Beijing and Shanghai.

“The upcoming region will reinforce the capabilities to help further nurture local talents, stimulate local innovation, grow local technology ecosystems, and empower businesses in a wide range of industries to achieve more,” said Alain Crozier, chairman and CEO of Microsoft Greater China Region.

Globally, Amazon Web Services is the dominant cloud provider followed by Microsoft Azure and Google Cloud.

But in China domestic companies reign supreme, with Alibaba Cloud the top dog among others including Huawei Cloud and Tencent Cloud.

Microsoft’s latest Azure expansion will boost its chances of increasing its market share in China. According to a Microsoft white paper, the cloud market in China is expected to reach approximately $46bn in 2023.

The new China region announcement came in the same week that Microsoft pointed the finger at Chinese nation-state hacking group Hafnium for breaching tens of thousands of organisations running its on-premises Exchange servers.

Read more: Use Exchange Server? Check for Chinese spies in your system – White House