water isn't even that big of a problem, the vast majority of DCs in EU are running on closed circuit cooling systems.
AI datacentres are a whole different story, with the energy requirement, pollution and noise (cfr. the US/TX X-AI datacenter and its NLG generators)
The China rhetoric makes no sense either, IMHO, sounds just like a scapegoat.
Data control? Well, I think that's a whole different story. And cybe risk: these businesses are ruining the Net. But it's just my 2c