The massive economic stimulus and boost to clean power from a 1.2 trillion yuan ($167 billion) mega-dam in Tibet has proven convincing enough for Chinese leaders to set aside concerns about potential damage to biodiversity and the impact on relations with India.
Chinese Premier Li Qiang launched construction of the hydropower project, which is three times the size of the Three Gorges Dam, on the lower reaches of the Yarlung Tsangpo river on Saturday. He also unveiled the China Yajiang Group, a new company that will manage the dam’s development.
While much is still unknown about the project, its cost alone shows the epic scale engineers are envisioning, with the estimate more than four times larger than the $37 billion that Three Gorges cost upon completion in 2009. That promises an economic jolt for sectors like construction, cement and steel, and a major new source of clean power that could eventually help the country reach its goal of net zero emissions by 2060.
Power Construction Corp. of China and China Energy Engineering Corp. rose by their daily limits of 10% in Shanghai, while China Energy Engineering’s Hong Kong shares surged as much as 51%. Huaxin Cement Co. more than doubled in Hong Kong before giving up some gains, while Anhui Conch Cement Co. climbed as much as 9.4% in the territory. Iron ore, and Chinese futures for steel rebar and hot rolled coil, also rallied.
India-China Tensions
The project carries risks, as well. The dam could become a source of tension between Beijing and New Delhi, as the Yarlung Tsangpo runs through the state of Arunachal Pradesh in northeast India and feeds into the Brahmaputra River, which then flows into Bangladesh.
India formally “registered its concern with China” last December, the country’s External Affairs Minister told lawmakers in March, adding that the project figured prominently in talks between the nations in January.
Some in India have called for the country to speed its own hydropower project in Arunachal Pradesh in response to China’s actions. Ojing Tasing, a minister in the state government, said the government was working with local communities to build support for the Upper Siang hydropower project located downstream from the Tibet dam.
“China has already started their dam construction, and we cannot sit idle,” he told local media on Sunday. “We must act. And we are acting.”
The groundbreaking on Saturday comes at a complicated moment in the relationship between the world’s two biggest countries. Bilateral ties have stabilized somewhat after a four-year stalemate over a June 2020 border clash that killed some 20 Indian and at least four Chinese. Beijing appointed a new ambassador to India in 2024, and earlier this year the countries agreed to resume direct flights and facilitate visa processes.
