China is embarking on a $167 billion hydroelectric dam project. The mega-dam along the Yarlung Tsangpo river in Tibet could become the world’s largest renewable energy project.

Chinese state engineers estimate the dam has the potential to generate 70 gigawatts of electricity — more than the total power capacity of Poland. The project will consist of five cascade dams around the city of Nyingchi in southeast Tibet, with engineers planning to straighten some of the river’s bends and divert water through tunnels, according to a report by Bloomberg.

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The massive construction effort promises to deliver an economic jolt to key industries while advancing China’s goal of reducing emissions in the electricity production sector. China hopes to complete the dam by 2033. But the project threatens to escalate tensions with neighboring India and Bangladesh. Environmental groups have also raised concerns over the impact on biodiversity.

What are the benefits of China’s mega-dam?

The project is a major economic opportunity. Citigroup analysts estimate that the mega-dam could boost China’s economic growth by almost 0.1 percentage point — roughly $17.8 billion — in its first year of construction, delivering benefits to the construction, cement and steel sectors.

Stock markets reacted to the announcement with the Power Construction Corporation of China and the China Energy Engineering Corporation hitting their daily 10% trading limits in Shanghai, while China Energy Engineering’s Hong Kong shares surged 51%. Huaxin Cement more than doubled in Hong Kong before giving up some gains.

Beyond the economic boost, the project aligns with China’s clean energy objectives. The hydroelectric power generated could help the country achieve its goal of reaching net-zero emissions by 2060 by providing a massive new source of renewable energy.

China has built massive dams before, most notably the $37 billion Three Gorges Dam, completed in 2009, which remains the world’s largest hydroelectric facility when measured by installed capacity.

How will this affect relations with India?

The Yarlung Tsangpo flows through Arunachal Pradesh, a state in northeast India with over 1.4 million residents, feeding into the Brahmaputra River, which continues into Bangladesh. India expressed its concerns about the project to China in December 2024. Officials from India fear the mega-dam could cause their rivers to dry up or lead to flooding, depending on how China manages the project.

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Reddit Unbiased. Straight Facts.TM China’s Three Gorges Dam, the largest hydroelectric dam in the world , produces eight times more electricity than the Hoover Dam does in the U.S.

Arunachal Pradesh Chief Minister Pema Khandu warned that China could use the dam as a “water bomb.”

According to an article published by the BBC, Khandu said, “Suppose the dam is built and they suddenly release water, our entire Siang belt would be destroyed.” He added that the Adi tribe and similar groups “would see all their property, land, and especially human life, suffer devastating effects.”

The mega-dam project comes at a delicate time for the world’s two most populous nations. In June 2020, a border clash killed about 20 Indian soldiers and at least four Chinese. While direct conflict has not continued, India is positioning itself as Asia’s alternative to China as a manufacturing hub, aiming to counter Beijing’s growing global influence.

What are the environmental risks?

The Yarlung Tsangpo gorge, where the river drops 6,500 feet over a 31-mile stretch, is home to a national nature reserve. Known as one of China’s top biodiversity hotspots, the gorge contains more than 4,500 plant species.

The construction also poses seismic risks in one of the world’s most earthquake-prone regions. The dam is planned between two tectonic plates, just 300 miles from where the strongest earthquake ever recorded on land struck in 1950. The project could disrupt sediment flows and accelerate coastal erosion, making the river’s vast delta more vulnerable to sea-level rise, according to an article in Yale Environment 360.

Environmental concerns have been largely set aside in favor of the project’s economic and energy benefits. Beijing has promised to implement measures that ensure safety and environmental protection, claiming there will be no adverse impacts on downstream areas.

The massive economic stimulus and boost to clean power from a 1.2 trillion yuan ($167 billion) mega-dam in Tibet has proven alluring enough for Chinese leaders to set aside concerns about potential damage to biodiversity and relations with India.

Chinese Premier Li Qiang launched construction of the hydropower project on the lower reaches of the Yarlung Tsangpo river on Saturday, and unveiled the China Yajiang Group, a new company that will be charged with managing the dam’s development, according to the official Xinhua News Agency.

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 the Three Gorges Dam 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. both rose by their daily limit 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. gained as much as 7.6% in Hong Kong. Chinese commodity futures for steel rebar and hot rolled coil also rose on the news.

The project carries risks, as well. The dam could become a source of tension between China and India, as the Yarlung Tsangpo runs through the state of Arunachal Pradesh in northeast India and feeds into one of its major rivers, that then goes into Bangladesh.

Environmentalists in China have long worried about the irreversible impact of dam construction in the Yarlung Tsangpo gorge, where the river drops 2,000 meters (6,560 feet) in elevation over a 50-kilometer (31-mile) stretch. The area is home to a national nature reserve and is one of the country’s top biodiversity hotspots.

There are also challenges involved in getting materials and workers to such a remote site, while stringing power lines to get the electricity where its needed will add costs.

Beijing has said that there won’t be any adverse impact to downstream areas and has promised to put in place measures to ensure safety and environmental protection.

The project will consist of five cascade dams and be located around the city of Nyingchi in the southeast of the autonomous region of Tibet, Xinhua said. Engineers will figure out ways to straighten some of the river’s bends and divert water through tunnels, according to the report.

State engineers have said the gorge has the potential for 70 gigawatts of electricity generation — more than triple that of Three Gorges, the world’s largest power project, and in excess of the total power capacity of Poland.

It’s also unclear how the Yajiang Group will finance what’s likely one of the world’s costliest ever infrastructure projects, but given China’s history of lending for dams and the ability of future hydropower sales to help repay loans, that seems unlikely to be a problem.

Earlier this year, the National Development and Reform Commission included construction of a dam on the lower reaches of the Yarlung Tsangpo River in Tibet and a power transmission project from there to the Hong Kong area in its annual report to the National People’s Congress.

©2025 Bloomberg L.P.

China is constructing a massive 1.2 trillion yuan dam in Tibet, prioritizing economic benefits and clean energy over biodiversity and India relations.

www.bloomberg.com

China’s ambitious hydropower project, a 1.2 trillion yuan ($167 billion) mega-dam in Tibet, is set to reshape the region’s energy landscape. Launched on July 21, 2025, by Premier Li Qiang, this initiative aims to significantly boost clean power while raising concerns about biodiversity and international relations, particularly with India.

6 Key Takeaways Massive economic stimulus from mega-dam

Boost to clean power initiatives

Concerns over biodiversity impact

Project larger than Three Gorges Dam

New company for dam management

Construction launched by Premier Li Qiang

The dam, which is three times larger than the famed Three Gorges Dam, will harness the Yarlung Tsangpo river’s potential. The newly formed China Yajiang Group will oversee its development, according to the official Xinhua News Agency. But will the economic benefits outweigh the environmental costs?

Fast Answer: China’s mega-dam in Tibet promises substantial clean energy but raises biodiversity concerns and tensions with India.

This monumental project has sparked debate over its implications. Can economic growth justify potential ecological harm? As nations grapple with climate change, the balance between development and conservation becomes increasingly crucial.

China aims for energy independence and economic growth.

Concerns about biodiversity and regional stability persist.

International relations, especially with India, may be strained.

The construction of this mega-dam could escalate tensions in South Asia, impacting diplomatic relations and environmental policies.

As the world watches, the outcomes of this project will likely influence global energy strategies and environmental considerations. Will China lead the way in sustainable development, or will it face backlash for prioritizing growth over nature?