The Silicon Valley firm has been suffering behind the bamboo curtain because of political pressure and declining sales.
Cisco and Inspur said they would invest $100 million in the project, although they offered few other details.
However this deal is typical of a growing number of tie-ups between Chinese and US technology firms which are part of a cunning plan to get government regulators off the backs of the big multi-nationals.
Microsoft is to partner with Baidu and Chinese state-owned private investment firm Tsinghua Unigroup on cloud technology. Dell announced last week it would invest $125 billion over five years in China. IBM pledged to help develop China’s advanced chip industry with a “Made with China” strategy.
Chipmakers Intel and Qualcomm are developing chips with smaller Chinese companies.
Similar to its dealings with the foreign auto industry in decades past, Chinese officials have made clear to foreign technology firms that market access depends on their sharing technology and cooperating with Chinese industry.
Cisco’s market share has fallen in China, where its products have been labelled a cybersecurity threat by state media and government-affiliated experts.