NextFin News — Ulanqab, a northern city hundreds of kilometers from Beijing, has become one of China’s densest clusters of data-center construction. Local authorities have signed dozens of projects. Alibaba, Huawei, Kuaishou and specialist operators have all taken space. One abandoned school is being converted into a computing facility. The attraction is not software talent. It is relatively cheap electricity, available land and a climate that eases cooling loads.

The building boom coincides with a sharp decline in model prices. In May, DeepSeek made permanent a 75 percent cut on its V4-Pro API rates. By October, a Token price index compiled by Silicon Data and cited by the Financial Times showed composite prices more than 52 percent below their May peak. Not every model fell equally; some premium offerings held steadier. The direction, however, is clear: intelligence sold by the Token is getting cheaper.

Yet the companies that sell compute are spending more, not less. Alibaba’s capital expenditure for the quarter ended June 30 reached 67.678 billion yuan, up 75 percent year on year, driven largely by AI infrastructure. In the same period, its AI cloud and computing services revenue rose 45 percent to 48.437 billion yuan. The two figures capture the industry’s new tension. Model providers race to lower list prices. Cloud operators must finance facilities whose payback stretches over years.