NextDC, its portfolio company, has surged 83% this year amid increased demand for data storage services.
The nixed "Isolated Region" initiative would set up a business sequestered from Google’s existing cloud computing services, including data centers and networks.
The potential transaction could raise about $1 billion for the Shanghai-based developer of hyperscale data centers.
It’s in data centers that a considerable chunk of the new infrastructure development will take place.
Kingsoft Cloud is reportedly the third biggest cloud services provider in China by revenue.
Absent domestic cloud giants, US and Chinese platforms are rushing into Japan to fill the void.
The outlay is equivalent to about half its entire fiscal 2019 revenue.
The move comes amid a bigger push by China to promote its efforts to contain the pandemic.