As the global AI industry races to secure computing power, data center construction is facing a new set of challenges.
Since the second half of 2026, opposition to data center projects has emerged in multiple parts of Europe and the US. Rising electricity costs, community resistance and disputes over resource allocation have brought some projects to a standstill.
China, by contrast, continues to push ahead with its computing infrastructure expansion, following a development strategy centered on national computing hubs and coordinated growth between eastern and western regions.
AI boom drives faster data center construction in China
A look at China’s computing capacity offers a glimpse of the scale of this expansion. As of June 2026, China had 15.56 million standard data center racks in operation, while its intelligent computing capacity reached 2,185 EFLOPS, up 177% year on year, making it the world’s second-largest market by this measure.
The rapid growth in computing demand is closely linked to the boom in China’s large language model (LLM) industry. Over the past two years, daily token usage by domestic LLMs has increased more than 1,000-fold. As AI applications expand into areas such as AI agents, enterprise services and industrial applications, demand for computing infrastructure is entering a new phase of growth.
In the first seven months of 2026, at least 158 data center and intelligent computing center projects nationwide recorded winning bid values of more than 100 million yuan ($15 million) each. Their combined value exceeded 113 billion yuan ($17 billion). Meanwhile, many more projects remain in the planning, filing and construction stages. Investment in the sector continues to grow.
In terms of regional distribution, the eight national computing hub nodes remain the main centers of China’s computing infrastructure development. Cities and regions including Zhongwei in Ningxia, Hohhot and Ulanqab in Inner Mongolia, Qingyang in Gansu, and Shaoguan in Guangdong continue to advance data center projects.
Notably, computing infrastructure is also extending into smaller counties. Smaller computing facilities have begun operations in places such as Tuoli in Xinjiang and Guangnan in Yunnan. This marks the gradual development of a nationwide computing network that combines major hubs with regional nodes.
Project pipeline grows as 2027 approaches a delivery boom
However, a growing number of projects does not necessarily mean that all the planned computing capacity is already operational.
In the first three quarters of 2026, investment in intelligent computing infrastructure reached 728.8 billion yuanย ($109.2). Yet only 13.6% of the projects had entered operation, while projects in the planning and preparation stages accounted for 71.6%. This suggests that much of the investment remains tied up in projects awaiting construction, equipment deployment and final delivery.
Telecom operators remain the dominant force in China’s data center construction. They accounted for more than half of major tenders worth at least 100 million yuan ($15 million)ย in the first seven months of the year. Meanwhile, third-party internet data center (IDC) providers and state-owned energy companies are also stepping up their involvement.
Given the current project pipeline and construction pace, 2027 could become a major year for the delivery of new computing infrastructure in China.
China takes a different approach to data center development
One of the biggest challenges facing the global data center industry is how to balance growing computing demand with limited energy, land and community resources.
In parts of Europe and the US, opposition to data center projects largely stems from an imbalance between costs and benefits. Data centers consume vast amounts of electricity but generate relatively few long-term jobs. When local power infrastructure cannot expand quickly enough to meet additional demand, the resulting pressure can push up electricity prices for residents, while the economic benefits may not be shared with surrounding communities.
Ireland offers a notable example. In 2025, data centers accounted for 23% of the country’s metered electricity consumption. In Finland, estimates suggest that if construction continues at the current pace, wholesale electricity prices could rise by around 31% by 2030, potentially adding nearly 400 euros to annual household electricity bills.
China’s approach is different in that it began coordinating computing infrastructure development at the national level relatively early.
Launched in 2022, China’s Eastern Data, Western Computing initiative established eight national computing hub nodes and 10 national data center clusters. The plan aims to shift some computing demand from eastern China to western regions, where land, electricity and renewable energy resources are more readily available.
The strategy is about more than simply relocating data centers to the west. It also seeks to coordinate computing demand, energy supply and regional economic development.
Ulanqab in Inner Mongolia offers an example. More than 80 data centers have been established in the city, with 109 computing projects signed. Intelligent computing accounts for over 90% of its total computing capacity. Beyond building facilities and deploying servers, these projects have also created local jobs and supported the growth of nearby retail and other businesses.
Meanwhile, abundant wind and solar resources in western China provide opportunities for data centers to consume green electricity locally, helping reduce energy costs and ease pressure on conventional power supplies.
Computing competition shifts beyond data center construction
Global demand for AI computing power is still growing, but the criteria for competing in the data center industry are changing.
In the past, companies focused primarily on land and electricity costs. Today, the stability of energy supplies, the capacity of local infrastructure, community acceptance and the long-term economic benefits delivered to host regions have all become important factors in determining whether projects can move forward.
Through early planning of national computing hubs, closer coordination between computing and electricity infrastructure, and stronger links between eastern and western regions, China has established a relatively clear development strategy.
However, as more projects move toward construction and delivery, the industry still needs to address challenges such as avoiding redundant investment, improving computing capacity utilization and achieving greener, lower-cost operations.
Ultimately, the next phase of computing competition will involve more than chips, servers and the sheer scale of data centers. It will increasingly depend on the ability to integrate energy resources and coordinate computing capacity. The real competitive advantage may not lie in who has the most data centers, but in who can deliver computing power more reliably, efficiently and at a lower resource cost.
