Nearly 90 data centers are slated for construction in Ulanqab, a city of fewer than two million people in Inner Mongolia. Beijing is expanding infrastructure it considers essential to artificial intelligence. The planned sites include facilities bearing the names Huawei, Kuaishou and VNET. State plans, national computing hubs and a strategy directing data-processing work toward western regions with land and energy resources are shaping the push.
Beijing Sets the Infrastructure Course
The government sees AI as a potential engine of growth for an economy described as slowing and facing a shrinking population. Last month, Beijing announced a $560 billion plan to expand information infrastructure, including computing facilities. Its latest five-year national economic blueprint calls for linking computing infrastructure with green energy.
Beijing launched the strategy known as “Eastern data, Western compute” in 2022. It has designated eight national computing hubs and 10 national data-center clusters, including several hubs in western China. The policy directs investment and computing capacity across the country, while planners intend the facilities to serve AI applications in places such as Beijing.
China’s rapid construction contrasts with its constraints in advanced hardware. Stanford University research found that the United States had roughly 10 times more AI data centers than China as of last year, and other estimates show it had vastly more computing power. American technology firms also have access to the most advanced chips, which the report describes as the single most important ingredient for developing AI.
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 their technology still lags that of the United States, and supplies of cutting-edge models remain tight. “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.
Local Business, Land and Power
Construction has brought workers and customers to Ulanqab. Ma Rong, 56, who has run a grocery store and guest house there for 30 years, said: “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 a highway demolition forced him to leave his original location. His daily clientele doubled alongside the data-center buildout. “The environment isn't as clean as before, but people's incomes and the economy – it's way better,” he said.
Nearly half of Ulanqab's electricity grid draws from wind and solar. Inner Mongolia, once a major coal-producing region, has become a green-energy hub, with solar panels covering fields and wind turbines rising above grazing sheep. 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. Findings from the Centre for Research on Energy and Clean Air and Global Energy Monitor suggest that in the first six months of 2026, China wasted enough excess green energy to power Mexico for a year.
Companies Build; Public Opposition Is Absent
Government direction and private investment back the expansion. Research firm Rhodium Group expects investment by listed Chinese companies 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. Across the Communist Party-run country, public opposition to data-center construction is absent.
The Envision “Galaxy Campus,” under construction several miles from Bayin industrial park, spans more than 20 football fields. Envision says more than 80% of the facility's power will come directly from company-operated wind farms, bypassing the grid. Battery systems will store wind power, and a solid-state transformer will adjust electricity supplied to servers according to demand, said Ricky Zheng, the facility's general manager.
Zheng said the facility uses a “zero-water” system with industrial alcohol as coolant. He said the first phase of the planned 2-gigawatt facility was fully booked, and the company was building additional phases for AI and cloud services. “AI chips and servers are owned by our off-takers,” he 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.”
The strategy has limits. Some western computing hubs sit 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,” rural projects built to meet a broad government initiative but lacking the hardware or users to justify the investment. Ulanqab’s development is advancing through government planning and corporate commitments, but the source also records local costs: a demolished highway, a less-clean environment and a national buildout with a documented risk of unused facilities.