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China builds AI capacity one phase a year in Inner Mongolia's potato capital
In Ulanqab, an electrical engineer told the BBC the data centre site adds one phase every year and is now on its second. The siting logic is cheap land, cool air, and wind and solar capacity already standing in the grasslands.
The Product Desk · Product desk
What happened
- Farmers in Ulanqab, long known as China's official potato capital, are harvesting beside the rectangular blocks of data centre going up across the grasslands of Inner Mongolia.
- Those regions already hold vast wind and solar capacity, and land there is cheaper and the weather cooler, so less water is needed for cooling.
- The building continues as Xi Jinping travels to Washington on Wednesday for a White House meeting with Donald Trump that includes AI safety.
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Why it matters
- constraint A campus that gains one phase a year sets its own ceiling years ahead, so the capacity a Chinese provider can actually sell in 2027 is whatever is under construction now.
- decision Teams weighing Chinese open-weight models are picking a supply whose licence terms follow state encouragement and whose power costs sit in Inner Mongolia.
- contradiction Washington is arguing about whether to slow AI down while the site the BBC visited runs on an annual construction schedule, so a negotiated pause would have to stop concrete already poured.
- exposure Chinese labs remain exposed to US export decisions on advanced chips, and per the BBC their compensation so far has been open sharing and fast iteration.
The electrical engineer on the Ulanqab build counted the phases in order. "There is one phase every year. This is the second phase," he said, adding that "There will be many more phases afterwards." [3] Whatever that campus can serve two or three years out is being poured now, by the hundreds of workers in yellow helmets the BBC watched carrying equipment past the welding sparks [10].
The four places the BBC names have land and power in common. Land is cheaper in Ulanqab, Ningxia, Gansu and Guizhou, the weather is cooler so less water goes into cooling, and large wind and solar capacity is already built there [5]. They are sparsely populated, and the hundreds of data centres going up in them are for Huawei, ByteDance and DeepSeek [4]. Three of the four are in the north [17]. The report does not say how much capacity a phase adds or which workloads will run in the finished halls [18].
In Washington the talk is about pace. Trump said last week that "Whoever wins AI, wins" [11]. Anthropic's chief executive Dario Amodei called for keeping the US-led ban on selling advanced chips and equipment to China, and warned that a Chinese lead would "pose grave danger for the US and the world" [12]. The state-run Global Times dismissed the American fears as part of a "Cold War playbook" to "contain" China's rise [13]. The buildings themselves are meant to serve a state target of AI embedded across 90% of industries and society by 2030 [16].
For a team choosing models next quarter, the part of this that reaches a procurement document is the licence. Xi is encouraging Chinese firms to build more affordable open-source models that anyone can modify as they wish [7], while OpenAI and Anthropic keep their design elements secret [8]. According to the BBC, sharing the technology has let Chinese firms innovate quickly and has helped them work around limited access to advanced chips [9].
The other input is people. Jack Zhang of the University of Science and Technology of China, recruited by a high-level programme after studying at Yale and Cambridge [15], said: "Fewer students and researchers are heading to the US, and more are returning from the US to China. That is very clear." [14]
For a buyer, the useful questions to any provider quoting capacity for a future year are which campus, which phase, and whether that phase is under construction. At one phase a year, a phase that has not broken ground trails the one that has by twelve months. In Ulanqab the next one is phase three, and the engineer expects many more after it [3].
What to watch
- Whether the White House meeting changes the US-led ban on selling advanced chips and equipment to China that Amodei wants kept.
- Whether phase three at Ulanqab starts on the annual schedule the site engineer described.
- Whether Chinese firms keep releasing open-weight models on the affordable terms Xi is encouraging.