Microsoft (Nasdaq:MSFT) China signed a three-year agreement with the government of Hangzhou, Zhejiang province on May 15, including a plan to establish Microsoft's first China cloud computing center in the city, reports Sina. Under the agreement, Microsoft will also set up a local IT development center and collaborate with Hangzhou on software outsourcing services.

According to Alibaba founder, Chairman and CEO Jack Ma, Microsoft CEO Steve Ballmer recently visited Alibaba Group's Hangzhou office to negotiate further cooperation, reports Oriental Morning Post. In a previous partnership, Alibaba's consumer-focused e-commerce site Taobao.com used Microsoft's Internet Explorer 8 browser and Silverlight technology to provide more online store display options to Taobao users.