The news is likely to be welcomed by both Chinese Apple users and the government.
A local data center can bring much better network performance for users of Apple services, especially network-heavy ones like the iCloud.
There have been persistent complaints about occasionally poor network performance of Apple services in China.
Some users have not been able to activate their iPhones with the correct password, for example. Some were welcomed by a blank screen when opening Apple Store to download apps.
Storing all the data locally means the data will be much "closer" to users, in terms of both distance and network speed.
The Chinese government will also be satisfied as the largest company on earth took the lead to follow the country's Internet guidance.
Internet governance was an important topic for the government in the last year. Many network services, including Weibo microblog and WeChat messenger, introduced stricter rules to prevent fake news or terrorism communications from spreading.
Apple may also interested in this, as the iCloud includes an email service and a messenger that was widely used by hackers to spread illegal ads in China.
The data center is located in Guizhou Province and will be run by a local state-owned company called Guizhou-Cloud Big Data Industry Co. Ltd. (GCBD), which was founded in 2014.
In addition to the Apple data center, the company also runs a cloud service similar to Alibaba Cloud, Amazon Web Services and Microsoft Azure.