Especially when GE-ing China one's imagination can really go into turbo; there are so many unusual things there. Still, I think the model has some kind military function. Why?

It's of a militarily-sensitive region
Much of the terrain on the west side of the main north-south road is used by the military. The area where the map sits has been used for military exercise. North of here (OK, possibly no connection) is an airbase with weapons storage and hangars tunneled into the mountain.
Most of the vehicles parked around the model are olive-green (well, my imagination tells me that; GE colors are sometimes pretty bad). There are many dump trucks (there seems to be a lot of activity there), but even more personnel carriers. Inside that other facility, on the west side, it's true that there are vehicles of various colors. Perhaps that one does have a civilian function?
Too close to town? In the Chinese deserts military facilities are often right on the edge of towns, though on the side towards the hills, and away from agriculture. I have seen this hundred of times.
It's not possible to tell whether there's a fence. Looking on the south side of the area, the one without the trees planted, there are regularly spaced tiny blobs that are a shade darker than the embankment. But, again, it's impossible to say if they represent a fence.
There appears to a guard tower on the west as well as on the north side
If you're referring to the tower in the middle of the facility on the east of the model, that appears to be for radio broadcasting.

But, you know, in the end it's often very difficult to to tell what you're looking at in China. From all my crawling around this and other regions of China, it's hard to tell the difference between military and civilian. And in reality there's perhaps not a strict division between the two.

I propose a contest; have forum readers suggest alternate uses. I'll go first: this is China's first miniature golf course based on the terrain of one of the territories they occupy.