The city seat is the town of Gyêgu (also known as Yushu and Jiegu in Chinese), built in the valley of the Batang River, a right tributary of the Tongtian, which becomes the Jinsha at their confluence.

Chinese traders brought tea bricks from Sichuan and transported them to other parts of the Tibetan regions such as Lhasa, Chamdo, and Golok, which were the best-known towns during that time.

[citation needed] During the late 20th century, government officials encouraged traditionally nomadic merchants to settle down in Qinghai, including in Yushu, through measures such as low taxes and rents.

[4]: 120  A 1995 research paper estimated that these merchants, which included many Hui traders of the Tibetan Plateau, comprised about one-third of Yushu's population.

[5] With an elevation of around 3,700 metres (12,100 ft), Yushu has an alpine subarctic climate (Köppen Dwc, Trewartha Eolo), with long, cold, very dry winters, and short, rainy, and mild summers.

[citation needed] The festival site is located on the lush summer grasslands of the valley floor, to make for better horse-racing events.

[citation needed] The festival features feats of horsemanship and horse racing that have been native to the plateau for over two thousand years, as well as horseback archery, tug-of-war, weightlifting, and many other local sports.