Nearly 90 data centers are slated for construction in Ulanqab, where local businesses say they’re seeing more customers and one restaurant owner says a highway demolition forced him to leave his original location. The buildout is bringing workers and business to the city as companies and the Chinese government commit capital and infrastructure to artificial intelligence.
Ma Rong, 56, has run a grocery store and guest house there for 30 years. “Before, we’d just sit there and wait for customers. Now we’re constantly busy – picking up orders, doing this and that. We barely get a break.” He added: “Our business has gotten much better than before.”
Restaurant owner Liu Baoping, 58, said his daily clientele had doubled alongside the data-center buildout. A highway was demolished, forcing him to leave his original location. “The environment isn’t as clean as before, but people’s incomes and the economy – it’s way better,” he said.
Investment and Infrastructure
The planned sites include facilities bearing the names of Huawei, Kuaishou and VNET. Ulanqab, a city of fewer than two million people in Inner Mongolia on the edge of the Gobi desert, is becoming one of China’s data hubs.
Beijing announced a $560 billion plan last month to expand information infrastructure, including computing facilities, over the next five years. Private Chinese technology companies are also increasing investment in AI infrastructure. According to research firm Rhodium Group, investment by listed Chinese companies is expected to double this year to around $139 billion, still less than one-fifth of the $800 billion in AI data-center investment by their U.S. peers.
The government sees AI as a possible growth engine for an economy described as slowing and facing a shrinking population. More than 700 million people in China already use AI, according to official statistics. Chinese leader Xi Jinping told a global artificial intelligence conference in Shanghai this past July that China had “embraced AI with open arms.” He described AI’s use in manufacturing as a “shining hallmark of Chinese modernization.”
The buildout is linked to a state strategy launched in 2022 called “Eastern data, Western compute.” Beijing wants data centers, particularly in western rural areas with sun, wind and land, to absorb excess energy and support its green technology sector. China has designated eight national computing hubs and 10 national data-center clusters. Its latest five-year national economic blueprint calls for computing infrastructure to connect with green energy.
Limits and State Decisions
Between 2022 and 2025, China added electricity capacity equivalent to that of industrial power sources across the entire United States as of the end of 2025. In the first six months of 2026, China wasted enough excess green energy to power Mexico for a year, findings from the Centre for Research on Energy and Clean Air and Global Energy Monitor suggest.
Wind and solar supply nearly half of Ulanqab’s electricity grid. Inner Mongolia, once a major coal-producing region, has become a green-energy hub, with solar panels covering fields and wind turbines rising over grazing sheep.
The Envision “Galaxy Campus” is under construction several miles from Bayin Big Data Industrial Park and spans more than 20 football fields. It’s slated to rank among the world’s largest data centers by area when complete. Envision says more than 80% of its power will come directly from company-operated wind farms, bypassing the grid. General manager Ricky Zheng said the first phase of the planned 2-gigawatt facility was fully booked. The company was building additional phases for AI and cloud services.
“AI chips and servers are owned by our off-takers,” Zheng said. “When they give us the order to build such a big data center ... they were confident to have enough infrastructure to be installed in these (server) racks.”
U.S. export bans restrict Chinese companies’ access to advanced AI chips, including certain models from Nvidia and AMD. Beijing has also restricted imports of some less powerful options. Domestic chipmakers are trying to catch up, but supplies of cutting-edge models are tight and their technology still lags that of the United States. “If you look at the overall production cost of building a data center, chips are the most important factor, and they just don’t have enough,” said Nick Corvino, a researcher at the Carnegie Endowment for International Peace.
Some western computing hubs are too far away to serve certain tasks at the speeds required by urban centers in the densely populated east. Observers have also raised concerns about “ghost data centers” built to meet a broad government initiative but lacking the hardware or users to justify the investment. The article reports that public opposition to data-center construction is absent across the Communist Party-run country.