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China has officially launched construction on what it says will become the world’s largest hydroelectric facility, a multibillion-dollar megaproject on the Yarlung Tsangpo River in southeastern Tibet.
Chinese Premier Li Qiang presided over a groundbreaking ceremony in Nyingchi, marking the formal start of a project expected to generate 300 billion kilowatt-hours of electricity annually — three times the output of the country’s existing Three Gorges Dam.
Once complete, the dam will sit atop one of Asia’s most geopolitically sensitive rivers. The Yarlung Tsangpo flows from Tibet into India, where it becomes the Brahmaputra, before continuing into Bangladesh. That transboundary nature has triggered alarm downstream, with officials in both India and Bangladesh raising concerns about water security, agricultural disruption, and environmental impact.
Strategic Megaproject with Regional Repercussions
The project — part of China’s 14th Five-Year Plan and formally approved in late 2024 — will feature five cascading hydro-power stations and require a total investment of 1.2 trillion yuan (~$167 billion). According to Beijing, the primary goal is to supply electricity to external markets while also addressing local energy needs in Tibet.
China’s foreign ministry has attempted to temper regional backlash, asserting that the project underwent a comprehensive scientific evaluation and would not negatively impact downstream ecosystems or water rights. The ministry also emphasized the dam’s contributions to disaster prevention, climate adaptation, and regional energy cooperation — stressing it would not be used for political leverage.
“The strategic placement of the dam gives China physical control over a vital water artery for two downstream countries — that’s not a small concern,” said one Indian analyst. “In times of political tension, the ability to restrict or release flow could become a powerful tool.”
Environmental and Human Impact
Environmental groups have warned that the project could lead to biodiversity loss, community displacement, and long-term ecosystem disruption in the fragile Himalayan region. NGOs argue that even small alterations to river flow in the Brahmaputra basin could impact millions of people in India and Bangladesh who depend on seasonal floods for farming.
Operations are expected to begin in the early 2030s, with construction ramping up over the next five years.
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Markets React with Infrastructure Surge
Chinese infrastructure stocks surged following the announcement. The CSI Construction & Engineering Index jumped 4% to a seven-month high. Shares of major players such as Power Construction Corporation of China and Arcplus Group PLC hit their daily 10% trading limit.
Tunnel equipment maker Hunan Wuxin soared 30%, while Geokang Technologies, which produces intelligent monitoring terminals, also jumped sharply. Cement manufacturer Xizang Tianlu and explosives producer Tibet GaoZheng saw maximum daily gains amid expectations of massive demand for construction inputs.
“From an investment standpoint, mature hydropower projects provide steady, bond-like returns,” said Wang Zhuo of Shanghai Zhuozhu Investment Management. “But this early-stage excitement risks inflating valuations in a speculative way.”
