As candidates opposing the construction of massive artificial intelligence (AI) data centers score consecutive victories in US midterm elections, analysts suggest that China could unexpectedly reap the benefits.

While US Big Tech firms weigh overseas expansion and strategic adjustments in anticipation of tighter data center regulations, China may find a window of opportunity to boost its competitiveness in the global AI market, backed by its abundant power supply.

According to the Wall Street Journal (WSJ) on Friday, candidates who campaigned on halting data center developments have won in major hubs across states like Texas, Georgia, Ohio, and Michigan, heightening anxiety among AI companies.

Growing public backlash over data centers—fueled by concerns over their massive electricity consumption, heavy water usage, and noise pollution—has directly impacted election outcomes, raising the likelihood of suspended construction approvals and stricter environmental regulations.

Prominent tech investor Brad Gerstner stated on a podcast that up to 35% of planned US data center construction projects for next year are now at risk of facing serious disruptions.

Even industry leaders like OpenAI are scrambling for countermeasures. During an employee Q&A session the day after the midterms, OpenAI CEO Sam Altman was reportedly asked about public sentiment toward data centers and AI. Acknowledging that people understandably prefer not to live near data centers, Altman hinted that the company might need to explore building them in remote deserts. The WSJ reported that OpenAI executives are also deliberating whether to revise their capacity projections for next year's data center procurement.

Meta shares similar concerns. Dina Powell McCormick, who oversees Meta’s AI infrastructure, noted during a conference on the 4th that the construction environment for data centers in the US is bound to deteriorate. To mitigate regulatory risks, Meta is considering building new facilities or expanding existing ones overseas.

Anthropic has also flagged local government halts on data center construction as a major business risk. According to the WSJ, the company is actively pushing for overseas data infrastructure projects to reduce its heavy reliance on domestic computing power.

An Opening for China?

Amid these domestic hurdles, some experts argue that US Big Tech's data center bottlenecks could create new openings for China.

Gary Ng, a senior economist at French investment bank Natixis, told the South China Morning Post (SCMP) that a slowdown in US data center expansion could work to China's advantage. While a decelerating US buildout could keep AI service costs high, China could leverage its abundant power supply to offer relatively inexpensive AI inference services overseas.

This paradox suggests that while the United States pours massive capital into maintaining its AI hegemony, domestic regulatory friction surrounding infrastructure could become a wildcard in its race against China.

Nevertheless, uncertainties remain over whether US data center construction will face widespread, long-term shutdowns. Regulatory tightening could prove temporary, or companies may simply pivot their construction plans to states with friendlier policies. At the same time, China continues to face hurdles in securing advanced AI semiconductors, meaning closing the technological gap with the US in the short term remains a formidable challenge.

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