China’s AI Data Center Boom Raises Water Risks in Inner Mongolia

Ulanqab in China’s Inner Mongolia has emerged as a computing hub for artificial intelligence, with technology companies including Huawei, Tencent and DeepSeek building infrastructure for training and running large language models. The expansion highlights the physical costs behind China’s AI ambitions: data centers consume large amounts of electricity and require intensive cooling, placing additional pressure on water supplies in a region already vulnerable to scarcity and drought.

A recent report said 89 AI data centers have been established in Ulanqab. Heat generated by their servers is partly removed through water-intensive cooling and evaporation, raising concern that continued expansion could worsen local shortages and drought risks. The report called on operators to disclose water withdrawals, consumption and recycling data, and urged technology companies to share the cost of expanding the water, electricity and utility networks needed to support the computing parks.