- China has launched construction of the world’s largest hydropower dam on the Yarlung Zangbo River, set to produce 300 billion kWh annually.
- The dam has sparked serious concerns from India, Bangladesh, and NGOs over environmental damage, seismic risk, and impacts on downstream water flow and communities.
Chinese Premier Li Qiang announced the start of construction on what will become the world’s largest hydropower dam, located on the eastern edge of the Tibetan Plateau. The ambitious project, with an estimated cost of at least $170 billion, signals China’s largest hydropower undertaking since the Three Gorges Dam.
The official Xinhua News Agency reported the launch on Saturday, July 19, noting that the project, comprised of five cascading hydropower stations, will generate 300 billion kilowatt-hours annually. That output equals the total electricity consumed by the United Kingdom in 2024.
Positioned in the lower reaches of the Yarlung Zangbo River, the dam taps into one of the steepest elevation drops in the world, 2,000 meters over 50 kilometres, providing enormous hydropower potential.
Markets reacted swiftly. Chinese equities surged on Monday, interpreting the dam’s groundbreaking as a clear sign of economic stimulus. The CSI Construction & Engineering Index (.CSI399995) jumped 4% to a seven-month high. Shares of Power Construction Corporation of China and Arcplus Group PLC hit their 10% daily limit.
“The project offers bond-like returns to investors due to the long-term revenue potential of mature hydropower assets,” said Wang Zhuo, a partner at Shanghai Zhuozhu Investment Management. However, he cautioned against excessive speculation in related stocks.
Construction equipment suppliers also saw massive gains. Shares in Hunan Wuxin Tunnel Intelligent Equipment Co and Geokang Technologies Co Ltd both soared by 30%. Cement maker Xizang Tianlu Co Ltd and Tibet GaoZheng Explosive Co hit their 10% daily trading limit, driven by expected demand for cement and civil explosives, according to a note from Huatai Securities.
Premier Li described the project as a “project of the century” and stressed the importance of ecological protection. “We must prioritise environmental conservation to minimise damage,” he said.
Despite Beijing’s reassurances, the dam has triggered geopolitical and environmental concerns. India and Bangladesh have raised alarms over the potential impact on millions of people downstream. Environmental groups warn the dam threatens one of the most biodiverse ecosystems on the Tibetan Plateau.
The Yarlung Zangbo becomes the Brahmaputra River as it flows into India and Bangladesh. Authorities in India, including Arunachal Pradesh Chief Minister Pema Khandu, have expressed fears that the dam could dry up as much as 80% of the river flow through northeastern states or trigger devastating floods.
Experts also worry about the dam’s location in a seismically active zone, increasing the risk of structural hazards.
Beijing insists the dam will help meet growing energy demand in Tibet and the broader Chinese power grid without significantly affecting water flows or the environment. It expects operations to begin in the 2030s.
The newly formed state-owned China Yajiang Group will oversee the massive project. Beijing’s push to revive economic growth through public investment, especially as traditional growth drivers weaken, is reflected in this undertaking.
Citi analysts estimate that over a 10-year construction period, the project could boost China’s GDP by 120 billion yuan ($16.7 billion) annually, with potential spillover effects beyond direct investment.
While the government has not revealed job creation figures, the Three Gorges Dam project generated nearly a million jobs during its two-decade development. However, it also displaced a similar number of residents. Authorities have yet to disclose the displacement estimates for the Yarlung Zangbo project.
As global scrutiny mounts, China appears determined to forge ahead, betting that the megaproject will deliver economic and strategic dividends, at home and abroad.