The US titan said it was partnering with an internet service provider in southwestern Guizhou province on the project, which will "improve the speed and reliability of our products and services while also complying with newly passed regulations."
It appeared to be referring to the June 1 implementation of a new law that, among other things, requires tech companies to store user data inside the country.
Some foreign firms have said the law is worryingly vague on key provisions and expressed concern over the potential impact on their business in the world's second-largest economy.
The law also further tightens Chinese curbs on web content, banning the publishing of anything that "disturbs economic or social order" or is aimed at overthrowing the government.
But Apple issued a statement seeking to allay fears that data-security could somehow be monitored or compromised by China's government or other parties.
"Apple has strong data privacy and security protections in place and no backdoors will be created into any of our systems," it said in the statement released Wednesday.
The firm did not give any financial details of the project, but China's state-run Xinhua news agency said it was part of a $1 billion investment.
China has hundreds of millions of smartphone users and is a vital market for Apple, whose iPhones are wildly popular in the country.
Fu Liang, a Beijing-based independent telecom analyst, said more foreign data centres are expected under the cyber-security legislation.
"The new rule requires this key information to be put in China. The boundary is very clear," Fu said.
He said the ramifications for Apple and other companies could be higher costs and potentially more restrictions under Chinese law.
"For (Apple) users, the good thing is their user experience like download speed will improve but the downside is that their access to overseas services and resources will be reduced," Fu added.
"It will be harder for them to access services that aren’t allowed in China now."
Computer and data security has become a top international concern following recent cyber attacks including the global ransomware contagion in May that affected government, industrial, academic and other computing systems in more than 150 countries.
The six-month-old administration of US President Donald Trump has been dogged by allegations that his candidacy benefitted from Russian hacking aimed at discrediting his campaign opponent Hillary Clinton.
The finger also has been pointed at Moscow for interference in the recent French elections, and Germany's domestic security watchdog warned last week that the country would likely face Russian cyberattacks heading into September's general election.
